A tax return audit from the Internal Revenue Service can cause headaches for millions of taxpayers who were not aware of how long they should keep archives of their tax returns.
It is wise to keep a record of your tax filings in order to show proof of income, deduction or credit shown on the original tax return. If you keep copies of your return, it may be helpful in filing future returns for years to come.
The IRS has a period of time to go back and collect unpaid tax debt, as well as a recommended period for taxpayers to archive their tax documents. How long do you keep your tax returns?
The Internal Revenue Service has a complete outline for the number of years taxpayers should keep their tax records based on various factors.
The agency recommends that you keep them up to three years from the date you filed your original tax return or two years from the date on which the taxes were paid. Individuals should keep records for seven years if they ever file a claim for a loss from worthless security or bad debt deduction, according to the IRS.
If an individual doesn't report their income, they should keep a record for six years, especially if it is more than a quarter percent of the gross income shown on their return. If they don't file a tax return, they should keep all their tax-related records indefinite.
The types of documents you should make copies of include various tax forms that are essential to your April filing. The recommended documents include a long list of tax-related forms such as W-2 s, 1099 s, title insurance fees, records of itemized deductions, mileage logs, stock records and 1040 s.
In the case of an IRS audit, you need to keep a copy of your tax return along with proof that you filed it on a certain date. A registered receipt or mail slip is a type of proof required to send your tax documentation.
How many years can the IRS go back to collect taxes?
The statutes of limitation give the IRS, or the government, a time frame in which they can go back for collection after assessment of tax liability. The IRS Code section 6502 says that the government's right to be able to receive the collection of the liability is ended by the expiration of the collection statute.
The IRS has a decade, or 10 years, to collect unpaid tax debt, but once that time ends, the debt it wiped out of the books.