Well, it is that time of year when we want to “clean out” everything. But wait a minute, some things we have to hold on to forever.  Because while the IRS generally has only three years from the date you file your return to come after you for extra tax, they have six years to audit you if you omit more than 25% of your income and NO time limit if you file a fraudulent return with the intent to evade tax.  So throw away the shoebox and purchase a small fireproof safe or rent a safe deposit box at your bank and fill it with the following:

  • Income Tax Returns and proof of tax payments
  • Investment Trade Confirmations
  • Retirement Records
  • Tax notices and Audit reports
  • Legal Records
  • And of course, any important correspondence that you may have had with your tax accountant.
  • (For a complete list see the IRS publication 552 “Recordkeeping for Individuals”: http://www.irs.gov/pub/irs-pdf/p552.pdf)

It’s not just about proving that you are an honest tax payer; you have up to seven years to take deductions for bad debts or worthless securities, so don’t toss out records that could result in refund claims for those items.

With today’s technology we can save space by saving documents to a CD or a Flash Drive but Old Fashion paper documents are still a good way to go.  The most important thing to remember is to protect these records from fire or water damage.

If you have any questions or would like more information, please contact:

Denise Algeo

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