Keeping Tax Records

By | March 5, 2014

Well-organized records facilitate the preparation of a tax return and help to provide answers if your return is selected for examination or prepare a response if you receive a notice from the IRS . By keeping good tax records now, it will save you a lot of headaches in the future.


What Tax Records to Keep for an IRS audit?

Records such as receipts, canceled checks and other documents supporting a party of income, deduction or credit that appears on a declaration must be retained as they may become material in the administration of any internal revenue law, that would usually be until the expiration of the period of limitations for that statement. If it relates to an assessment of tax you owe, it is generally three years from the date you filed the return. Returns filed before the due date are treated as filed on the due date.


How Long to Keep Tax Records?

There is no limitation period to assess the tax when the statement is fraudulent or when it has not been submitted. If the income you must declare not declared and is more than 25% of the gross income shown on the return, time to price it is 6 years from the date on which the return was filed.The period for filing a claim for credit or refund, generally is 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. The time for filing a claim for overpayment resulting from a bad debt deduction or loss resulting from worthless securities is 7 years from the due date for filing the return.


How long must employer keep tax records for IRS?

If you are an employer, you must retain all records of employment taxes for at least 4 years from the date on which the tax is due or paid, whichever is later.


Keeping Tax Records with Business

If you have a business, there is no particular method need to be used for bookkeeping. However, you must use a method that reflects your gross income and expenses clearly and accurately.Records must document your income and expenses. The Publication 583 , Starting a Business and Keeping Records (How to start a business and keep records) and Publication 463 , Travel, Entertainment, Gift, and Car Expenses (expenses for travel, entertainment, gifts and cars), both in English, provide more information on the required documentation for taxpayers with business expenses.