How long should I keep my records?
A question I am asked frequently is how long should I keep my tax records? There is no one answer to that question. The answer is “It depends”.
According to the Internal Revenue Service:
If you do not file a tax return, keep records indefinitely.
If you file a fraudulent return, keep records indefinitely.
You do not report income you should report, and it is more than 25% of the gross income shown on your return; keep records for 6 years.
If the situations already mentioned do not apply; keep records for 3 years.
If you file a claim for credit or refund after you file your return; keep records for 3 years from the date the original return was filed or 2 years from the date the tax was paid, whichever is later.
If you file a claim for a loss from worthless securities or bad debt deduction; keep records for 7 years.
For records relating to property that was disposed of in a taxable disposition; keep records until the period of limitations expires for the year in which you dispose of the property.
This raises the question of what is the period of limitations?
The period of limitations is 3 years from the original due date of the tax return to claim a refund. The IRS can audit your tax return and levy additional tax in that same 3 year period.
The IRS has 10 years from the date a tax liability is finalized to collect outstanding tax liabilities.
As we’ve discussed before, everyone’s situation is a little different. To discuss your situation, please call me at 231-775-0842 to set a time to meet or visit my website today..
Michael Smith | 06/16/2017