How Long To Keep Tax Documents?
Its so hard to believe that tax season is here! I’m sure many of you have already filed. I’m a end of February kind of filer. So its time for me to get moving!
I have a treat for you today! A huge area of trouble I almost always run into with clients is paperwork. How many times have you wondered: “What do I really need to keep?” Today I will be sharing specifically on tax information, and next week on everything else. And most importantly, I’ve warranted help from a professional in the area of finances.
Here’s the low-down on how long to store those tax documents, according to Caleb Griffith, CFP:
For most “normal” tax purposes, it is 3 years. You filed your 2010 tax return sometime in 2011 (could be as late as Oct 2011 with extensions). So, sometime later this year, it will be 3 years since the filing of the 2010 return – but not yet. So, for years before 2010 (2009, 2008, 2007, etc), you are beyond the 3 year period now and “normally” wouldn’t need the backup tax documents/information.
On the other hand, if you have a “substantial under reporting of income” (defined to be more than 25%)….the 3 year period is stretched to 6 years.
If you don’t file, or if you file a fraudulent return, the IRS has no time limitations, so it may be best to keep your records indefinitely.
There may also be non-tax reasons to keep records longer. For example, the nature of your business (regulations) may require you to keep certain records for a longer period.
And lastly he says, “When in doubt, keep it.”
I hope this helps those of you who need paperwork relief in this area! Here’s a direct link to this information on the IRS website: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-long-should-I-keep-records
Thank you Caleb for helping my readers get a handle on this! Caleb Griffith is a Certified Financial Planner and is employed with Townsend Asset Management Corp. as a Financial Advisor.
Thanks for reading and happy tax filing for you!Melissa
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