| Tax
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
to run.
Which
records are important?
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Records
of income received |
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Expense
items, especially work-related |
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Home
improvements, sales, and refinances
(for homes with profit potential of $250,000 or more)
|
| |
Investment
purchases and sales information |
| |
The
documents for inherited property |
| |
Medical
expenses |
| |
Charitable
contributions (records vary with value of gift) |
| |
Interest
and taxes paid |
| |
Records
on nondeductible IRA contributions |
How
long should records be kept?
Just how
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.
We have
a brochure available that lists recommended retention periods
for various items, Contact us to obtain your copy.
If you
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.
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