records should be kept on a year-round basis, not hastily assembled
just for your annual tax appointment. Without tax records, you
can lose valuable deductions by forgetting them on your tax
return, or you may have unsubstantiated items disallowed if
you are audited.
Generally, returns can be audited for
up to three years after filing. However, the IRS may audit
for up to six years if there is substantial unreported income.
The three and six year limits start with the filing of a tax
return; if no return is filed, the time limit never starts
records are important?
of income received
items, especially work-related
improvements, sales, and refinances
(for homes with profit potential of $250,000 or more)
purchases and sales information
documents for inherited property
contributions (records vary with value of gift)
and taxes paid
on nondeductible IRA contributions
long should records be kept?
long you should keep records is partly a matter of judgment
and a combination of state and federal statutes of limitations.
Federal tax returns can be audited for up to three years after
filing (six years if underreported income is involved). It
is a good idea to keep most records for six years after the
return filing date.
a brochure available that lists recommended retention periods
for various items, Contact us to obtain your copy.
are in business, your record requirements are more extensive.
Please call us; we will be happy to assist you with a system
of record retention.