When it comes to tax returns, there are a lot of questions about how long they should be kept. The short answer is that you should keep them for as long as the IRS says you should. However, we will go into more detail in this blog post about why you should keep tax returns and how long you should keep them.
1. How long should you keep your tax returns?
The IRS recommends that you keep your tax returns for at least three years. This is because the IRS has three years to audit a return. However, if you have any questions about a return or if there are any discrepancies, you should keep the return until those issues are resolved.
There are some exceptions to this rule. For example, if you file an amended return, you should keep that tax return and all supporting documentation for six years. And if you file a claim for a loss or credit due to bad debt or worthless securities, you should keep those tax records for seven years.
If you’re self-employed, it’s also a good idea to keep your tax returns indefinitely. This is because they can be used to show your income for tax purposes and to help you keep track of your expenses.
In general, it’s a good idea to keep tax returns and supporting documentation until the statute of limitations expires. This is usually three to six years after the return was filed. After that, you can shred them or delete them.
2. What to do with them after you’ve kept them for the required amount of time?
Once you’ve kept your tax returns and supporting documentation for the required amount of time, you can shred them or delete them. If you’re not sure how to destroy them properly, you can always contact a professional tax consultant such as those from taxalliance.com. They will be able to help you safely dispose of your tax records.
3. How to store them so that they’re easy to find when you need them?
If you’re planning on keeping your tax records for a while, it’s important to store them properly. One way to do this is to create a file system. You can use folders, labels, and even electronic files to keep track of your tax records. This will make it easy to find the records you need when you need them.
Another option is to use a storage service like Iron Mountain or SecurShred. These companies offer secure storage solutions that will protect your tax records from fire, water damage, and theft.
Whatever method you choose, just make sure that your tax records are stored in a safe place. This way, you’ll be able to find them when you need them and you won’t have to worry about them being damaged or destroyed.
4. Whether or not you should make copies of your returns
While you’re not required to make copies of your tax returns, it’s a good idea to do so. This way, you’ll have a backup in case your originals are lost or destroyed. You can either make copies yourself or you can contact a professional tax preparer or accountant to do it for you.
Making copies of your tax returns is a good way to protect yourself from identity theft. If your tax records are stolen, the thief will only be able to use the information on the copy. They won’t be able to access your bank account or credit cards.
5. What to do if you can’t find your tax returns
If you can’t find your tax returns, don’t panic. There are a few things you can do to try and locate them.
First, check with the IRS. They may have copies of your tax returns on file. You can request copies of your tax returns from the IRS by filling out Form 45060.
You can also contact your former employers or banks. They may have copies of your tax records on file. And finally, you can try searching for them online. There are a number of websites that offer access to public tax records.
Be Aware of Potential Consequences
As you can see, there are several methods that you can use to efficiently keep your tax records without any issues. Keep in mind that not following these steps may lead to serious financial issues. First of all, you might face a situation where you will have to pay more money as part of taxes.
Also, you won’t qualify for any sort of deduction, which is considered a waste of money and an additional expense. Moreover, making some mistakes with the papers will lead the IRS to conclude that you are not eligible for any kinds of benefits during the examination. That will lead to penalties and a higher amount that you will have to pay.
Having a proper strategy of keeping the paper accurate and transparent can help you avoid legal issues as well, along with the feature to save your business from fraud or copyright issues. If you own a company, always keep all data related to contracts and paychecks of your employees. Missing a single paper can cause serious problems.
There are two main reasons why you should always file the report on time. The first one is related to the fact that avoiding that for a longer time will be considered a crime since the officials will take charges for the attempt of covering financial reports and trying to avoid making this payment.
Also, not dealing with this in a determined period will lead to penalties. If the court determines that you had clear intentions of avoiding taxes, the penalty can be up to five years sentences, and more than $250k.
Things could easily go in the wrong way. For example, not delivering the report for a couple of years, and getting away with it may lead some people into thinking that they can continue with that practice for a longer time. Keeping that practice for more than 10 years will surely lead to serious consequences.
Another very important thing to know is that there is no expiry date on taxes. Even if you keep getting away for more than 10 years, it is a matter of time when the officials will discover it, and you will be charged for fraud.
The standard limit is 10 years, and that is also related to penalties. Some details can be different from state to state. That means that there are states where you might have a delayed period of up to 20 years to deal with the taxes and get them into the right form.
In case the penalties are too high so you cannot pay them all at once, there is always a chance to negotiate a good deal where you can return the money over time. Also, if you owe some serious amount, there is also a chance to get it deducted, but only if you manage to prove that you made a mistake and that it was not on purpose as an attempt to avoid these payments.
If you ever find yourself in this situation, the first thing to do is to hire a good lawyer experienced in this area so you can prepare in the best way and avoid some serious penalties.
If you still can’t find your tax returns, you can always contact a professional tax preparer or accountant. They will be able to help you locate the missing records.
If you have any questions about how long to keep tax records, we recommend talking to a tax professional or an accountant. They will be able to advise you on what records you should keep and for how long.
Thanks for reading! We hope this blog post has been helpful in answering some of your questions about tax returns. If you have any other questions, feel free to leave us a comment below or contact us directly. We’re always happy to help!