CHARLOTTE – Hey Tax Payer. This question comes up all the time at the end of tax season.
So, Let’s Get To It…
Now that tax season is over, whew, for now, I always get asked this same question of how long should I keep my taxes on file? 3-years, 7-years, 10-YEARS? As an Accountant, I inform my clients to hold onto their taxes for a minimum of 10 YEARS! The reason why I tell them to store their filed taxes so long is because I had a new client call Mays Concepts LLC asking if we could assist them with a situation. It turns out the IRS had audited them for unpaid taxes in the amount of $70,000. The IRS had put a $70,000 lien on their home for failing to file taxes for the past 10-years.
According to the IRS, they have posted on their website Periods of Limitations:
- Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
- Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
- Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
- Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
- Keep records indefinitely if you do not file a return.
- Keep records indefinitely if you file a fraudulent return.
- Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
That is so confusing!! Mays Concepts LLC did take on the new client to remedy their situation in which we were able to reduce their tax liability from $70, 000 to $5,000. Needless to say, the client was very, very pleased. The IRS states on their website to hold onto your taxes for only 3-years with a max of 7-years, but since the client had that situation with the IRS doing a 10-year audit, Mays Concepts LLC will always advise our clients to hold their filed taxes for 10 YEARS!!
For more information about this article then contact Mays Concepts, LLC at (704) 526-0307, email us at email@example.com, or visit/like our Facebook page https://www.facebook.com/MaysCon
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