to keep and how long to keep it
records should be kept on a year-round basis, not hastily assembled
just for your annual tax appointment. Without tax records, you
can lose valuable deductions by forgetting them on your tax return,
or you may have unsubstantiated items disallowed if you are audited.
returns can be audited for up to three years after filing. However,
the IRS may audit for up to six years if there is substantial
unreported income. The three and six year limits start with the
filing of a tax return; if no return is filed, the time limit
never starts to run.
records are important?
of income received.
items, especially work-related.
improvements, sales, and refinances
(for homes with profit potential of $250,000 or more).
purchases and sales information.
documents for inherited property.
contributions (records vary with value of gift).
and taxes paid.
on nondeductible IRA contributions.
long should records be kept?
how long you should keep records is partly a matter of judgment
and a combination of state and federal statutes of limitations.
Federal tax returns can be audited for up to three years after
filing (six years if underreported income is involved). It is
a good idea to keep most records for six years after the return
are some records worth keeping permanently, partly due to long-term
needs and partly because they take up very little room. Consider
permanently retaining a copy of each year's tax return. Contracts,
real estate buy/sell records, and records of property improvements
should be retained for seven years after the property is sold.
you are in business, your record requirements are more extensive.
Please call us; we will be happy to assist you with a system of
record retention for your business.
Wilson & Company
Certified Public Accountants, PC
701 Seneca Street, Suite 604
(716) 839-4900 Fax: