Rules for Keeping Tax Records | AccountingWEB

Rules for Keeping Tax Records

How long are you supposed to keep the receipts and other documents that support the numbers you put on your tax return?

The Internal Revenue Services expects taxpayers to maintain certain financial records and sets guidelines for how long you are supposed to save this information. The records you are required to keep go hand in hand with the preparation of your tax return.

Keep cancelled checks, receipts, bank and brokerage statements, credit card statements, pay stubs, letters from recipients of charitable contributions (for contributions of $250 or more), utility bills, and any other documentation that adequately proves the correctness of the numbers that appear on your tax return.

The IRS recommends that you keep records that support the numbers in your tax return for at least three years from the time you file your tax return or the due date of the tax return, whichever is later. If you amend your tax return, the three-year rule still applies. Save your tax receipts for three years from date on which you file your amended tax return.

The three-year rule comes from the fact that the IRS has three years from the later of the due date of your tax return or the date on which you file your return to examine the return and request supporting documentation.

If you don't pay all of your income tax with your tax return, it is recommended that you keep your tax records for three years from the due date of the return or two years from the date on which you complete the payment of your taxes, whichever is later.

If you own investments in items such as stocks, bonds, and collectibles such as valuable art or antique cars, keep receipts for the acquisition of these investments for as long as you own the investments, and then three years after the year in which you sell the investments. The same rule applies to items you use in your business, such as office equipment, machines, computers, and business furniture.

If you own a home, it is recommended that you keep the records from the purchase of the home for as long as you own the home, as well as three years after you file the tax return for the year in which you sell the home.

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