How Long Is It Recommended To Keep Statements And Receipts Of Your Personal Tax Return?

The Internal Revenue Service (IRS) can still audit you or your company in Hanover even after you have paid your taxes. For this reason, it is essential to save tax statements, receipts, and documents. Let us say the IRS would like to find out about a discrepancy they discovered in your previous files. To provide them with the required data, you will need well-organized papers. But how long should you maintain these documents? 

It is an important question, especially in the case that the IRS analyzes your tax filings. The typical reply is three years, but depending on the situation, you may wish to keep your data for even longer. For this reason, you should hire a CPA in Hanover, MD.

How long is it needed to preserve statements and receipts of your personal tax return?

In general, the IRS can audit your tax returns no later than three years after you submit them. That three-year review timeframe does have a few limitations, though. A few of the three-year rule’s exceptions are provided below. In some situations, it is mentioned how long you should keep your federal tax data.

• Do you have employment-related tax records?

If so, you have to keep your tax paperwork for a minimum of four years after the filing of your initial tax return.

• Did you underreport your total earnings on a tax return by more than 25%?

The IRS may audit your return stretching back up to six years in particular circumstances. It is advisable to save your tax paperwork for at least six years if you have concerns that you may have done this.

• Did you forget to file your taxes?

This does not have a statute of limitations; thus, you may have to pay a fine. This involves keeping every document you have from the initial incident of not filing your taxes.

• Have you filed a claim for a loss caused by bad debt deduction or worthless securities?

In that scenario, the IRS advises keeping your tax documentation for a minimum of seven years.

• After completing your tax return, did you submit a claim for credit or a refund?

Depending on your situation, there are two possible answers to this question. Either three years after submitting your initial return or two years after paying the tax, you will need to keep your documents. As advised by the IRS, you have to finish whatever comes first.