Are you as amazed as I am at the amount of paper generated by doing our taxes? Keeping receipts, statements, payments made, and all other manner of tax documentation can create a small mountain each year. So how long do you need to keep all of your tax return documents? Here are some tips:
Most taxpayers: Three years
The statute of limitations for an IRS audit expires after three years. That means most taxpayers should keep their tax records for three years after the date they filed their return, or two years after they paid tax – whichever is later.
There are three exceptions to the IRS audit time limit.
The agency can go back six years for an audit if you under-reported your gross income by 25 percent or more.
The IRS can also audit returns that claim a capital loss on worthless securities or take a deduction for bad debt, up to seven years after the return was filed.
If you didn’t file a tax return or filed a fraudulent one, there is no statute of limitations for an IRS audit. In these cases, keep all your records indefinitely.
The IRS also recommends taxpayers hold onto employment tax records for at least four years after the date that the tax is due or paid – whichever is later.
With stocks, bonds or property, maintain records until you sell the asset. For instance, you may need this documentation to determine depreciation or amortization as well as calculating a gain or loss after the sale.
Our shred-a-thon is March 30th from 8:00-12:00, at our offices at 1111 Douglas Ave. Altamonte Springs, Fl. Limit two banker’s boxes per person please.