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Record Retention Guide: How long should you keep your records?

Amber Yates

November 15, 2018

The IRS requires you to keep your records that support an item of income or deduction on a return until the period of limitations for that returns runs out. The period of limitations is the period of time in which you can amend your return to claim a credit or refund, or the IRS can assess additional tax.

 

Period of Limitations:

If you... Then the period is...
  1. Owe additional tax and situations, 2, 3 and 4, below, do not apply to you
3 Years

       2. Do not report income that you                         should report and if it's more than                   25% of the gross income shown on                 the return

6 Years

 

        3. File a fraudulent return

Not

Limited

 

        4. Do not file a return

Not

Limited

 

        5. File a claim for credit or refund after                you filed y our return

Later of: 3 years or 2 years after tax was paid

 

         6.  File a claim for a loss from worthless                  securities of a bad debt deductions

 

7 Years

 

Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date.

 EMPLOYMENT TAXES

If you have employees, you must keep all employment tax records for at least 4 years after the date the tax becomes due or paid, whichever is later.

 ASSETS

Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition.  You must keep these records to figure any depreciation, amortization, or depletion deduction, and to figure your basis for computing gain or loss when you sell or otherwise dispose of the property.

If you receive property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. You must keep both the old and the new properties records, until the period of limitations expires for the year you dispose the new property in a taxable disposition.

 RECORDS FOR NONTAX PURPOSES

When your records are no longer needed for tax purposes, verify that you no longer need them for other purposes before discarding. For example, your insurance company or creditors may require you to keep records longer than the IRS does.

You may view and download a complete record retention guide here.

Please call our office at (541) 388-7888 for more information, or if you have additional questions.

 

   

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