How long do i need to keep my tax returns
Every year about this time, taxpayers all over the country stare at piles of receipts, old tax returns and checkbooks and wonder: How long do I have to keep this stuff?The length of time you should keep your tax records depends on a number of factors, including the action, expense or event the document records. Here are a few brief guidelines:
- Keep your tax returns and supporting documentation until the statute of limitations runs for filing returns or filing for a refund. In most cases, the statue of limitations (SOL) for assessment of taxes expires three years from the due date of the return, or the date that you file, whichever is later. An extension of the due date for filing the return does not change the date the statute of limitations starts to run. If you fail to file, the statute never starts to run, so taxes can be assessed at any time. Special rules also apply if you file a false or fraudulent return or are willfully attempting to evade tax or if you substantially understate your gross income.
- If you claim depreciation, amortization or depletion deductions, keep those tax schedules and supporting documents for as long as you own the related property. Supporting documents include
deeds, titles and cost-basis records, such as sales receipts and proof of payment.
- If you claim special deductions and credits, you may need to keep your records a little longer than normal. For example, if you file a claim for a loss from worthless securities or bad debt deduction, you should keep those records for seven years.
- If you have employees, including household employees, keep your employment tax records for at least four years after the date that payroll taxes become due or are paid, whichever is later. This should include forms W-2 and W-4, as well as related pay information including benefit forms.
Of course, just because the IRS doesn't need those records doesn't mean you don't need them at all. Check with your mortgage providers, lenders and brokers before you throw those out.
All that said, don't go crazy with the record keeping. You don't have to keep records forever. Pay attention to dates and the kinds of records you have in your home. Don't be afraid to toss out what you don't need.Source: www.dailyfinance.com