Service Businesses | Healthcare | Manufacturing & Distribution | High Net Worth Families | Construction & Real Estate
Published on July 20, 2020
Service Businesses | Healthcare | Manufacturing & Distribution | High Net Worth Families | Construction & Real Estate
Figuring out how long you need to keep your tax records can be tricky. The easiest (and vaguest) answer is that it depends.
The general rule of thumb, according to the IRS, is that you need to keep records that support an item of income, deduction or credit until the period of limitations for that tax return runs out. The period of limitations is the time in which you can A) amend your tax return to claim a credit or refund and B) the IRS can assess additional tax.
Here are the periods of limitations that apply to income tax returns, as provided by the IRS. Get a downloadable and printable flowchart of this information here.
The IRS recommends keeping property records until the period of limitations expires for the year in which you transfer ownership of the property. You’ll need these property tax records to figure out depreciation, amortization or depletion deduction, and figure out the gain or loss when it’s time to transfer ownership.
In the instance that you received property in a nontaxable exchange, your basis in that new property is the same as the basis of the property that you gave up, plus any money you paid. You must keep records for both the old and new property until the period of limitations expires for the year that you transfer ownership of the property.
You might want to check with your insurance company and creditors before you get rid of any tax documents. You might be required to keep tax records beyond the period that the IRS requires as a condition of another policy or agreement.
If you have any questions, contact us here or call 800.899.4623 for help.
Published on July 20, 2020