CARL WATTS & ASSOCIATES
May 17, 2010
| Some records should be kept indefinitely or for longer periods of time: | |
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Records relating to property (real estate or stock) should be kept indefinitely to show the amount of gain or loss if the property is sold, plus the three-year statute of limitations
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Copies of your tax returns should also be kept indefinitely
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Records relating to a claim for a tax refund or tax credit based on bad debts or losses on worthless securities should be kept for at least seven years
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Records relating to a net operating loss which can be carried back 5 years and forward 20 years should be kept until all operating losses are used and the carry-forward term expires plus the three-years statute of limitations
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There is a six year statute of limitation if the IRS discovers that your gross income was understated by more than 25%
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If you’re an employer you must keep employment tax records for at least four years after the tax is due or paid
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And very important is to keep business accounts separate from personal accounts.
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Keeping all these records in good order will help you prepare and support all your tax return information and at the same time help you get rid of all unnecessary paper burden. Poor or no records result in missed deductions and higher taxes.
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Washington DC
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tel/fax 202 350-9002 |
| Have you ever wondered what records you need to keep and for how long? Sure you have, probably every time you tripped over those paper filled shoe boxes :-) |
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| So, first of all, you need to keep all records that support expenses and deductions: |
Record Keeping for Tax Purposes and Otherwise:-)
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Payment records (canceled checks, credit cards payments)
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Invoices/bills cross referencing the business expense |
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Receipts that itemize purchases and method of payment |
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Records of donations or charitable cash or non-cash contributions |
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Receipts for meals and entertainment |
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Mileage records |
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Income records |
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Tax records like these should be kept for at least three years, which is the IRS statute of limitations, but sometimes more as the statute of limitations may differ for the state tax return.
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