Every year after you file your taxes, you more than likely have several documents that support what you just filed to the IRS. It can leave people wondering what they need to keep and how long they need to keep these documents. Unfortunately, there isn’t a clear-cut answer for everyone. Mark Dicus & Company is here to talk about tax documents and what you need to keep and for how long.
IRS General Guidelines
You would think that the IRS would give some clear answers as to what they want and for how long. However, all they provide us with are general guidelines that should be followed. The amount of time you need to keep certain documents depends on the action, expense, or event which the document records. You need to keep all records that support income, deduction, or credit until the statute of limitations runs out. In other words, you have to keep documentation until the time frame closes in which the IRS could perform an audit.
Period of Limitations According to the IRS
Following is what the IRS recommends you do with your tax documents:
– For most circumstances, you need to keep your tax records for three years.
– You should keep these records for three years from the time you filed your taxes or two years from the time you paid the taxes, whichever one is longer.
– You should keep your records for seven years if you are filing a claim for a loss from worthless securities or bad debt deduction.
– If you didn’t report income that you should have, you need to keep a hold of your record for up to six years since that is how long the IRS has to initiate an audit. This if for people who failed to report at least 25% of their income.
– If you did not file a return, you need to keep your record indefinitely because at any given time the IRS can come and collect from you.
– When you file a fraudulent return, you need to also store your record indefinitely because the same rule applies to this.
– You need to save your employment tax records for four years from when your file or four years from when the taxes were paid.
When is It Time to Get Rid of Tax Documents
One thing to keep in mind before you get rid of any documents, make sure there isn’t any company that is going to need them for any reason. Also, when getting rid of documents, it is wise to have them shredded to properly get rid of any sensitive information.
Tax Preparation, Filing, Planning & More in Salt Lake City, St. George, West Valley City, Provo, Orem, West Jordan & Greater Cedar City, Utah
If you are confused on what you should keep and what you shouldn’t, you need the help of the experts at Mark Dicus & Company to answer all your questions. We will make sure you aren’t caught without documentation you need. Call us today!