What Tax Records Can You Stop Storing

It's always better to keep tax records in case you find yourself getting audited. However, you might worry that the IRS will come knocking once you discard records, so you'll end up saving more documents than needed. So what records do you have to keep? How long do you have to save these records before you can dispose of them? The statute of limitations officially set by the Internal Revenue Service is the first criteria. Within 10 years, the IRS can still audit your tax records. They can no longer collect those taxes or audit those returns after that. This statute of limitations is set in place because realistically, records can get lost. So even if you can no longer pursue refunds beyond this ten-year period, your IRS issues also essentially disappear. The second criteria you'll want to utilize as a guide is the 3-year rule. Essentially, there's a 3-year statute of limitations for the assessment of additional taxes. For example, the three-year period begins from the date the original tax return was filed if you want additional money from a refund. But there are also a few exceptions to this rule. For example, the limitations period will actually be 6 years if you just reported a portion of your total income and the unreported figure is 25% of the the income reported. Another exception occurs when you possess a worthless security and endeavor to claim a loss on that security. This has a limitation period of seven years. Lastly, there is no statute of limitations if you file a tax return that is fraudulent, or decide not to file a return at all. The IRS has the power to go after you at any time. Assess your chances of being audited before you dispose of documents. If an audit is a possibility, then it's better to keep documents that would back up your case such as employment, brokerage, and bank statements, capital losses and gains, tax returns, business records, and expenses on your home for the entire 10-year statute of limitations period. You'll be protected against IRS issues this way.


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About the Author:
Darrin T. Mish (http://www.getirshelp.com) is a Nationally recognized Attorney whose practice focuses on representing clients across the United States with IRS Problems. He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel's Bar Register of Preeminent Lawyers. He can be reached at his website at http://www.getIRShelp.com