At Christianson, making sure you’re prepared and never at risk is one of our top priorities. One of the most commonly asked questions is: “how long do I have to keep my tax records?”. This is important for both individuals and for businesses. Here’s what you need to know:
How Long Should I Keep Records?
The general recommendation is to keep tax records for 3 years from the date you filed your tax return. So for 2016 tax returns filed by April 15, 2017, the 3 year period expires on April 15, 2020. This is the timeframe that you have to amend a tax return or the IRS has to audit you.
There are certain circumstances when the IRS can initiate an audit after the 3 year period, such as if a tax return was never filed, or if a fraudulent tax return was filed. In that case, the records should be retained forever.
What do I Have to Keep?
Keep copies of your filed returns. They are helpful in preparing the next year or amended returns.
Generally you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out. This includes W-2s, 1099s, receipts for charitable contributions, and any other deductions taken.
If you are a business owner, you must keep receipts for all expenses. Simply entering them into your accounting software or keeping the credit card statements is not enough support for an IRS audit.
Common items you will want to have receipts for are travel, meals and entertainment, and detailed mileage logs.
Records relating to property, such as purchasing land or a home (including receipts for significant improvements) should be kept for 3 years after the property is sold.
The IRS does allow these documents to be scanned and saved electronically.
If you have any further questions, please contact us!