Today we will look at how long you should maintain copies of tax returns and related records. This is a popular questions that we get asked every year.
As a general rule, it is a good idea to keep a copy of a filed tax return indefinitely. For the related records and receipts, here’s what the IRS specifies:
1. You owe additional tax and situations (2), (3), and (4), below, do not apply to you; keep records for 3 years.
2. You do not report income that you should report, and it is more than 25% of the gross income shown on your return; keep records for 6 years.
3. You file a fraudulent return; keep records indefinitely.
4. You do not file a return; keep records indefinitely.
5. You file a claim for credit or refund after you file your return; keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later.
6. You file a claim for a loss from worthless securities or bad debt deduction; keep records for 7 years.
7. For papers supporting homes, real property and investments, you need to maintain the related records for at least three years after the sale of those items.
Always make sure you dispose of any financial records in a safe manner to help prevent identity theft.
Don't forget, we only have 8 days until your federal individual tax return is due on April 15th!
Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein