The tax season is here, and April 15 is just a few months away! My biggest questions are: How long should I keep my tax returns and records? How much do I earn? My health records? What about older tax reports?
Even after you submit your income tax return services, the IRS can still audit you or your business. This is why it is important to keep tax records, statements and receipts. Suppose the IRS detects a variation of your previous filter and wants to log in. You will need systematic records, so that you can send them requested requests. But for how long do you need to keep these records? An important question, especially if the IRS is reviewing your refunds. Three years is a normal response, but in some cases, you may want to keep your records longer.
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How long should you keep your tax records?
The IRS can usually only go back and review your tax returns three years after you have submitted them. But there is one exception to that three-year review period. Below, we have listed some exceptions to this three-year rule. We also show you how long you have to keep your corporate tax records in these cases.
Do you have employment tax records?
If so, you will need to keep your tax records for at least four years after filing your initial refund.
Have you stopped reporting more than 25% of your tax return?
In these cases, the IRS can go back six years to evaluate your return. If you are worried you may have done this, it is best to keep your tax records for at least six years.
Failed to file tax returns?
There are no restrictions on this, which means you will have to pay a fine. This means keeping all your records from the first time you fail to file your tax returns.
Have you filed a fraudulent tax return?
If you have filed a fraudulent return or someone has done so on your behalf, there is also no limit to this case. This means keeping all your records.
Have you filed a loss for non-performing securities or a bad credit reduction?
If so, the IRS recommends keeping your tax records for at least seven years.
Have you filed a credit or refund claim after submitting your tax returns?
You will be required to keep your records for three years after submitting your first form or two years after you have paid your taxes. You will have to do whatever comes later, according to the IRS recommendation.
None of the above cases apply to you?
After that you are all ready to stick to the three-year rule.
What receipts and statements should you keep?
Now you know how long you have to keep your tax records. But you may be wondering what specific records you need to keep. Here are some examples of best income tax return services and receipts to keep:
- A copy of your current and previous Federal and State tax
- Any W2 you found
- Mile logs
- 1099 forms
- Receipts related to deductions, credits or work
- Any other paperwork may support the reduction and credits you claim
- File cabinet with brown hanging files and white tabs
- A woman is typing on a portable laptop computer against a blue computer grid
- A man in a white shirt and black jacket identifies the blue lock on the grid
Do state and federal returns are having different rules?
Each state has its own rules and regulations on how long you must keep your tax records. The IRS usually recommends keeping your records for three years if there are no problems. Virginia follows IRS rules, so keep your records for three years unless otherwise applicable. But some states may go back and forth to monitor your state’s tax returns. For example, California and Arizona have four-year limitations. Montana is moving forward with a five-year program. If any of the above applies to you, the restriction law may be even longer.
How should you maintain and maintain your tax records?
The IRS does not have any specific rules in this regard. All they care about is that you can get and send tax returns when you request them. There are many ways to organize and maintain your records, but here are some of our recommendations:
Upgrade the installation program and stick to it.
Are you using online software or a physical filling program? Of course, it is important to stay organized throughout the year no matter what. First, plan your tax returns for the year. Each year, you can have separate folders for every 12 months. Then sort the documents into categories such as “tax returns” and “bank statements.” You can get the details as you want! You can add different folders for receipts, invoices, canceled checks, and more. Be sure to specify the limitation law for each folder so you know how long it will last.
Find a place to store your records.
Whether you store paper files in file cabinets, on a computer or online, you need to make sure they are secure. Fireproof cabinets are ideal for your paper records. By accessing the records on your computer, make sure they are safe from cyber threats and have backups for your files. There are also online file storage options such as Google Drive, Cloud Storage and Box. Make sure they have cyber security protection and renew protection regularly.