At my firm, we get this question all the time: “How long do I need to keep my tax records?”
Here is the IRS answer to this question:
Well organized records make it easier to prepare a tax return and help provide answers if your return is selected for examination, or to prepare a response if you receive an IRS notice.
- What to Keep – Individuals. In most cases, keep records that support items on ???? your tax return for at least three years after that tax return has been?filed. Returns filed before the due date are treated as filed on the due date. Examples include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks or other proof of payment and any other records to support deductions or credits claimed.? You should typically keep records relating to property at least three? years after you’ve sold or otherwise disposed of the property. Examples?include a home purchase or improvement, stocks and other investments,?Individual Retirement Account transactions and rental property records.
- What to Keep – Small Business Owners. Typically, keep all your employment tax records for?at least four years after the tax becomes due or is paid, whichever is ???? later. Also, keep records documenting gross receipts, proof of purchases,?expenses, and assets. Examples include cash register tapes, bank deposit?slips, receipt books, purchase and sales invoices, credit card charges and?sales slips. Forms 1099-Misc, canceled checks, accounts statements, petty?cash slips and real estate closing statements. Electronic records can?included databases, saved files, e-mails, instant messages, faxes and?voice messages.
There is no period of limitations to assess tax when a return is fraudulent or when no return is filed. If income that you should have reported is not reported, and it is more than 25% of the gross income shown on the return, the time to assess is 6 years from when the return is filed. For filing a claim for credit or refund, the period to make the claim generally is 3 years from the date the original return was filed, or 2 years from the date the tax was paid, whichever is later. For filing a claim for a loss from worthless securities the time to make the claim is 7 years from when the return was due.
For more information from the IRS, check out:
- Publication 552,? Recordkeeping for Individuals, provides?more information on recordkeeping requirements for individuals.
- Publication 583,?Starting?a Business and Keeping Records
- Publication 463,?Travel,?Entertainment, Gift, and Car Expenses, provide additional information on required documentation for taxpayers with business expenses
For a more complete listing, please check out this Record Retention Guide Compiled by the Massachusetts Society of CPAs.
Above details Tax records explained very clearly and perfectly…