Recordkeeping for Taxes
to keep and how long to keep it
Tax records should
be kept on a year-round basis, not hastily assembled just for your annual tax
appointment. Without tax records, you can lose valuable deductions by forgetting
them on your tax return, or you may have unsubstantiated items disallowed if
you are audited.
can be audited for up to three years after filing. However, the IRS may audit
for up to six years if there is substantial unreported income. The three and
six year limits start with the filing of a tax return; if no return is filed,
the time limit never starts to run.
of income received.
items, especially work-related.
improvements, sales, and refinances
(for homes with profit potential of $250,000 or more).
purchases and sales information.
documents for inherited property.
contributions (records vary with value of gift).
and taxes paid.
on nondeductible IRA contributions.
How long should
records be kept?
Just how long you
should keep records is partly a matter of judgment and a combination of state
and federal statutes of limitations. Federal tax returns can be audited for
up to three years after filing (six years if underreported income is involved).
It is a good idea to keep most records for six years after the return filing
There are some
records worth keeping permanently, partly due to long-term needs and partly
because they take up very little room. Consider permanently retaining a copy
of each year's tax return. Contracts, real estate buy/sell records, and records
of property improvements should be retained for seven years after the property
If you are in business,
your record requirements are more extensive. Please call us; we will be happy
to assist you with a system of record retention for your business.
DANIELLE MICHAELS &
& TAX CONSULTING
151 N. Almont Dr., Apt. 102
Beverly Hills, California 90211
Fax: (310) 278-5375