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As a general rule I do not keep a photocopy of all of my clients' Forms W-2s with my file copy of a finished return. I have enough paper to file without adding another sheet or two to each return.
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There are occasions where I do photocopy the W-2s, and I seem to be doing so more and more each year.
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I now have a copy machine that allows me to print a 2-sided copy of a 2-sided original - so I will drastically reduce my paper consumption. I have decided that, beginning with 2009 returns, I will make and keep a copy of all Form W-2s, and probably all Form 1099-MISCs for nonemployee compensation, for all clients.
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I am constantly getting requests during the "normal" year for copies of W-2s that are needed for mortgage applications, or college financial aid applications, or for a variety of reasons. While I do return all original Copy Cs of client W-2s in the finished return package, and many clients also receive 2 copies of Form W-2 Copy 2 (for state returns), it seems that W-2s apparently and mysteriously disappear - like one sock from a pair in the washer or dryer.
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Just this morning I had to fax a copy of a dependent child's 2008 Form W-2 to a college financial aid office. The dependent had 2 Form W-2s for 2008 (2 jobs), but the mother could only find one of them.
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So fellow tax practitioners - a word to the wise. Make and keep a photocopy of Copy B of all Form W-2s for all of your clients. I expect your clients assume you already do.
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FYI, in my annual January client letter I tell them to make sure to make and keep photocopies of all Form W-2s they are sending me, so they do not have to bother me during the tax filing season and ask me to mail or fax a copy to them or a third party.
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Obviously all clients do not do this, and I invariably get a few requests for copies of W-2s that are in a "to be done" or "need more information" file in my office. I always do waste my time sending out the requested W-2, but I also remind the offending client of what I said, and highlighted, in my January letter.
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TAFN
