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I try to add tax blog articles weekly on tax topics that may be interesting to you. Please browse. If there is a topic you would like to see here or would like to more information on, please contact me.
How Long Should I Keep Tax Return Copies?
Depends on tax situation:
If don’t own a business, then keep AT LEAST four years of tax returns. The IRS has three years after the tax return is filed to review the filed return and send a bill. CAREFUL! IRS can review up to six tax years of tax returns if twenty five percent or more of tax return income is omitted.
The IRS can review all tax years if they can prove fraud (e. g. Al Capone). The phrase “Honestly is the best policy” applies.
If self employed, keep at least four years. Keep some paperwork longer if:
- Have Employees: Keep wage records and quarterly filing reports for employee while employed and for at least four years after the employee leaves company.
- Assets (e. g. cash register, computer etc) keep purchase receipts for as long as the asset is owned for warranty and for recapture rules when the asset is sold.
- Entity: If self employed business is an Partnership, S Corporation or C Corporation (Not Limited Liability Company) then keep all tax returns. IRS is reviewing how much partners and others are putting into and taking out of the business.
What you can’t prove can “burn” you. Cover your “assets”.