For how many years must the employer keep the copy of Form 940?

• A. 2 Years
• B. 3 Years
• C. 4 Years
• D. 5 Years

Answer: (C)

Four years is the required retention period for Form 940 copies and related unemployment tax records. You must keep them for at least four years after the due date of the return or after the tax is paid, whichever is later. This ensures you have documentation to support FUTA calculations in case of an IRS audit or review. So, the minimum retention time aligns with four years; two or three years don’t meet the requirement, and five years is longer than required, though keeping records longer is fine for your own purposes.