How many prsi contributions have i paid
How many years am I supposed to keep my tax receipts and records?
This is an excellant question and a very commonly asked question by my clients at tax time.
When it comes to maintaining tax records such as W-2’s, 1099’s, 1098’s, receipts, canceled checks, and other documents that prove to the IRS an item of income or a tax deduction appearing on your tax return, one should be keep in mind when the statute of limitations expires for that tax return.
Based on these rules, a taxpayer should safely store these records. Typically, the statute of limitations is three years from the date the tax return was due or when the tax return was filed with the IRS, or two years from the date the tax was paid to the IRS, whichever is later.
Thus, taxpayers generally have received advice to maintain records for at least 3 years that is the period until the statute of limitations expiration. However, things are not that simple, because the IRS is authorized to increase the audit deadline from three to six years if the amount of income a taxpayer failed to report is more than 25 percent of the amount shown on the tax return. Clearly, what this means is that the taxpayer should potentially maintain their
records for potentially 6 years!
Finally, per IRS rules, “there is no statute of limitations when a tax return is false or fraudulent or when no tax return is filed with the IRS.”
There are nonetheless, some special exceptions that would require the taxpayer to maintain certain tax records either indefinitely or for a period longer than 3 years. These are as follows;
1. Tax records relating to their residential or rental property.
These should be kept indefinitely since these may be needed to prove to the IRS the amount of gain or loss if the property is sold.
2. Tax documents that pertain to the basis of stock
These records should be kept until the recognition of gain or loss from sale of these stocks plus the three-year statute of limitations on the tax return filed with the IRS reporting the sale.
3. Keep copies of your tax returns indefinitely.
This would be useful in case of an audit and would be a good source document for your income.
4. Keep all your W-2s indefinitely.
These are important records because they list amounts paid to social security. These would be definite proof of your social security contributions during your working years. In the event of your retirement, the government pays you less than what you are entitled, you can use these prior years W-2s to prove your eligibility for more money.
5. Charitable contributions receipts, Casualty and Theft Losses
These should be kept for at least 6 years.
6. Partnership K-1's
These should be kept for at least 6 years, along with any basis calculation.Source: www.asktaxguru.com