Is it necessary for me to keep my tax records for a long time?

Is it necessary for me to keep my tax records for a long time?

According to the IRS, the length of time you maintain your tax records is determined by the “activity, cost, or event” that affects them.

The Internal Revenue Service (IRS) has certain strict guidelines for how long filers must maintain their tax data.

The statute of limitations on any revisions to your tax return, as well as the federal government’s power to seek extra tax payments from you, are affected by these actions and dates.

The statute of limitations determines how long you have to amend your tax return to claim a credit or refund, as well as how long the IRS has to impose extra tax.

The following information is taken straight from IRS.gov, and it explains how long tax returns should be kept. The selected years begin once the return has been submitted. Any returns that are submitted before the deadline are regarded to have been filed on time.

  1. If scenarios (4), (5), and (6) below do not apply to you, keep records for three years.
  2. If you submit a claim for credit or refund after filing your return, keep records for three years from the date you filed your original return or two years from the date you paid the tax, whichever comes first.
  3. If you make a claim for a loss from worthless securities or a bad debt deduction, keep records for seven years.
  4. If you do not declare income that you should have reported and it is more than 25% of the gross income stated on your return, keep records for six years.
  5. If you don’t submit a return, keep your records permanently.
  6. If you submit a bogus return, keep records forever.
  7. Maintain employment tax records for at least four years after the tax is due or paid, whichever comes first.

Maintaining Accurate Tax Records

Maintaining accurate tax records does not need an overflowing desk drawer. Even your paper tax documents may be kept organised with the aid of a number of internet solutions.

Keeping accurate tax records is simple if you devise a method and adhere to it. Only half the fight is won when it comes to determining which records should be kept. Keeping things organised takes discipline; otherwise, you’ll end up with an untidy shoebox full of receipts.

But don’t worry: there are online tools to help you keep organised. There are lots of tried and true strategies to keep you organised if you aren’t computer savvy.

“We’re seeing a lot more of this lately, tiny smartphone applications like Expensify.” Some folks find them quite appealing.”

How to Keep Documents Safe

Your tax papers should be stored in a fireproof safe or a bank’s safe deposit box. However, if you want to save space, scan all of your tax papers and save them to an external hard drive or a cloud service. The IRS accepts electronic copies as long as you can duplicate the papers and they are legible.

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