1. Finance

How Long Should You Keep Tax Records?

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The action, expense, or event that the document records will determine how long you should preserve it. In general, you must hold onto the documentation that backs up any income, credits, or deductions listed on your tax return until the statute of limitations for that particular tax return expires.

The statute of limitations determines how long you must file an amended tax return to claim a credit or refund before the IRS can charge you additional taxes. The limits periods that apply to income tax returns are shown in the information below. The years, unless otherwise specified, pertain to the time after the return was submitted. Returns submitted before the deadline are considered to have been submitted on that day. Keep copies of the tax returns Darwin you have submitted. They assist with computations and future tax return preparation if you file an amended return.

Here's How Long You Should Maintain Records, Plus Exceptions To The Three-Year Rule! 

1. Keep Tax Records For Three Years If:

All income was disclosed, and no fraud was perpetrated.

You submitted a claim for a credit or refund following the filing of your return.

2. Keep Tax Records For Four Years If:

You keep payroll tax records. Keep these for a minimum of four years following the day the tax is due or when it is paid, whichever comes first.

3. Keep Tax Records For Six Years If:

It's possible that you 25% underreported your income. If so, the IRS may look back to six years' worth of your tax returns.

4. Keep Tax Records For Seven Years If:

You claimed a loss resulting from bad debts or worthless securities, such as losing stocks or bonds.

5. Keep Tax Records Indefinitely If:

  • You can prove how much you initially paid for the property because you bought it.
  • You only submit a tax return for some years.
  • You submitted a false tax return.

Are The Records Connected To Property?

Keep property records until the statute of limitations for the year in which the property is sold has passed. When selling or otherwise disposing of the property, you must preserve these documents to calculate any depreciation, amortization, or depletion deductions and the gain or loss.

Your basis in any property you got in a nontaxable exchange equals your basis in the property you exchanged, boosted by any money you paid. Until the statute of limitations for the year you dispose of the new property, you must retain all relevant records on the old and new properties.

What Should I Do With My Records For Non-Tax Purposes?

Do not throw away your records when they are no longer required for tax purposes until you have determined whether you need to maintain them longer for other purposes. For instance, your insurance provider or creditors might want you to keep them longer than the IRS.

You need a location to store them now that you are aware it is a good idea to hold your returns for a while. Together with your tax preparer, online bookkeeping services Australia will make sure that all the data regarding the financials of your company is accurate. Go for it!


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