When Can I Toss Tax Records?
I wanted to post a really good article from Kiplinger that they sent over to me. These are common questions that this article answers.
Q: How long do I need to keep my tax records in case I get audited? Are there some records I should keep longer?
A: It’s a good idea to keep your returns indefinitely. But you can generally toss supporting tax records three years after the tax-filing deadline, which is the time the IRS generally has to initiate an audit. Several states have four years to initiate an audit (you can find out about the rules from your state department of revenue or taxation; see the IRS’s archive of state tax agencies). The federal audit period extends to six years if you underreport your income by 25%, so Jeffrey Schneider, an enrolled agent in Port St. Lucie, Fla., recommends holding on to your records for at least seven years.
Supporting documents you should hold on to for at least three years include your Form W-2s or Form 1099s reporting income; other 1099s reporting capital gains, dividends or interest; Form 1098, if you deducted mortgage interest; canceled checks and receipts for charitable contributions; and records showing expenses for other deductions and credits. Also keep records showing eligible expenses for withdrawals from health savings accounts or 529 college-savings plans. If you have business expenses, keep records of those costs, such as for equipment purchases, phone bills, business travel and marketing expenses. If you claimed a home-office deduction, keep records of your rent or mortgage interest, homeowners or renters insurance, real estate taxes, utilities, and other eligible expenses. Keep receipts showing any tax-deductible retirement-savings contributions, such as to a deductible IRA, simplified employee pension or solo 401(k). Also keep Form 1095 showing that you had eligible health insurance, or records showing that you met the criteria for an exemption.
Continue reading Kiplinger’s article by clicking on this link- http://www.kiplinger.com/article/taxes/T055-C001-S003-when-to-toss-tax-records.html