How Long do You Need to Keep Your Records?

How Long do You Need to Keep Your Records?
The IRS has 3 years from the date you filed your return to assess any additional taxes you owe. If you did not report all of your income and it is more than 25% of the gross income you reported on your return, the IRS has 6 years from the filing date of the return to assess additional taxes. If you failed to file a return or filed a fraudulent return, there is no statute of limitations preventing the assessment of additional taxes. (ergo, ipso facto - the IRS can go back as far as they want if they detect fraud. An example in law is money laundering: the act is ipso facto illegal because it is done as a cover for something else, so the act puts the actions of an individual in question).

► You have 3 years from the date you filed your return or 2 years from the date you paid the tax, whichever is later, to file a claim for credit or refund. If you filed your return prior to the due date, it is considered filed on the due date.
► The following are some general rules for determining how long to maintain your important personal tax records:

► Maintain records on investment property you currently own and keep these records as long as you own the property. When you sell an investment, records will be used to determine whether you have a gain or loss and if the gain/loss is short term or long term. Maintain the records related to the sale of an investment with the tax return on which the sale was reported.
► Maintain nondeductible IRA contributions records indefinitely. They will be needed to determine the non-taxable portion of your required IRA distributions.
► Maintain records for depreciable property showing the purchase date, cost of the property, the date and cost of any improvements to the property, and a depreciation schedule showing the method used and the depreciation taken for all the years that you owned the property. Keep these records until you sell or dispose of the property with the tax return on which you report the sale.
► Maintain birth certificates, marriage licenses, divorce agreements, wills, copies of estate and gift tax returns, etc. in a permanent file. These are important documents that may be needed to verify information on a tax return.

Please contact this office for details and assistance with any or all of the above. We can guide you and relieve the tedious attention to detail so you can do what you do best.