How Long Do You Have to Keep Financial Records After Filing Taxes?

When determining how long to hold on to your taxes, different situations are going to call for different actions to be taken. Click here to find out what to do in the event of filing for an expense, event, or types of actions to be taken, when determining what to do after you have filed. These are a few periods of time to consider, based upon the reason you are retaining your tax records.

Filing a claim for a loss –
In the event you are going to file a claim for a loss, it is advised for you to retain your tax records for a period of up to seven years after you file. These can stem from worthless securities or claims from bad financial investments which were made in the year which you filed, and are claiming the loss for.

Don’t report income properly –
In the event you do not report income you should have reported for a particular year, or incorrectly report income for that year, it is advised for you to retain those tax records for a period of three years. This is the case if the gross income for that year is 25% of above what you actually filed for the year in question.

Don’t file a return –
If you failed to file a return completely for a particular year, you need to retain those records indefinitely. Not only will this be used to prove income was not earned for a particular year, but an audit can be done for several years following a tax year which you failed to file a return for any particular reason.

Fraudulent return –
As is the case when you do not file a return at all, if you have filed a fraudulent return, you should retain the tax records for that particular year indefinitely. Whether you failed to claim a portion of your income, did not include certain information, or chose to leave information out for any reason, tax audits can take place several years after the fraudulent filing in question. So having copies of all tax records is going to be required when the IRS comes calling.

These are a few of the different instances in which you are going to want to retain records of the tax returns, and the duration of time for which you are going to want to retain those records. Of course IRS rules are constantly changing, tax brackets are always changing, and rules are constantly changing as it pertains to audits and the IRS. For these such reasons it is important to keep up with tax codes and to keep yourself informed about the changes in the duration of time for which you should retain the records, and the taxes you filed for any year in question. These are just a few of the suggested guidelines. But, for each type of return, and depending on if it is personal or business, the years and duration for which you are going to retain certain records will vary for each filer or company.

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