Tax Records ? How Long To Keep Them? | Finance information

Most

tax deadlines are easy to remember like the filing deadline or the due date to pay estimated tax payments however, when it comes to how long to keep tax records , most people do not have a clue . So you want to know, how long to keep tax records

The easy answer is

return until the statute of limitations expires for that tax. Records should be kept that include receipts, canceled checks, and other documents needed to prove to the IRS what your filing legitimate! This is usually three years from the DUE DATE for the tax return or when the return was actually filed with the IRS or two years from the date the tax was actually paid to the IRS, whichever is LATER. This is generally accepted as the time period # in which the IRS can question your tax return

. NB: If you do not file your taxes or file a fraudulent or false tax return there is no statue of limitations. This is what trips up a lot of people, when the IRS comes knocking after 5 years and all of the tax records have been discarded after 3 years. You MUST know, it is that the IRS wants to claim that a tax return was fraudulent or false. Not filing any taxes at all is self explanatory .

Some tax records should be kept indefinitely, like property tax records. These records will be required to prove to the IRS, your gain or loss when you sell the property

statute of limitation provisions differ, here are some you should keep in mind.

You should retain documents verifying the value of real estate or stock until you sell them and realize a gain or loss plus the three-year statute of limitations on the tax return filed after that sale with the IRS.

Keep indefinitely copies of your tax returns. Yes, there is the statute of limitations is 3 years but it will not apply if the IRS suspects fraud or it was falsely filed. Keep those tax returns. Something else to consider is that without your knowledge the IRS changes many returns. The original may not be necessary if IRS records are magically different from what you filed.

Keep tax records that relate to any claim with the IRS for a tax refund or tax credit that was based on bad debts or losses on worthless securities for at least seven years. You may find you need these in the future. Net operating loss (NOL) can be Carried back years 2 years and carried forward 20th It is very important for you to keep your tax records until all net operating losses are used to offset taxable income and the carry forward term expires. Add the 3 year statute of limitations on the tax returns filed with the IRS that used the carry forward

Beware:. If it is found by the IRS that you understated your gross income by 25% or more the statute of limitations will be doubled to year sixth Take this advice, if there is anything EVER questioned on your tax return, keep the return and all supporting documentation indefinitely

So, in a case where a fraudulent tax return filed in vivid, or no tax return has been filed with the IRS, the IRS can make this assessment at any time

Finally. An employer must keep all employment tax records for a minimum of 4 years after the taxes are due the IRS or have been paid, whichever is later.

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