Now is a great time to purge old tax records

Judy Kaltenbacher, CPA, Tax Partner,

  Filed under: News and Tax Blog

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Whether you filed your 2016 tax return by the April 18 deadline or you filed for an extension, you may be overwhelmed by the amount of documentation involved. While you need to hold on to all of your 2016 tax records for now, it is a great time to take a look at your records from previous tax years to see what you can purge.

Consider the statute of limitations
At minimum, keep tax records for as long as the IRS has the ability to audit your return or assess additional taxes, which generally is three years after you file your return. However, it may be extended to six years when there is a substantial understatement or omission. To be safe, we recommend keeping records for seven years.

Keep some documents longer

You will need to keep certain records beyond the statute of limitations:

  • Tax returns. Keep them forever as a reference and a record that you filed.
  • W-2 forms. Consider holding them until you begin receiving Social Security benefits. Why? In case a question arises regarding your work record or earnings for a particular year.
  • Records related to real estate or investments. Keep these as long as you own the asset, plus three years after you sell it and report the sale on your tax return (or six years if you’re concerned about the six-year statute of limitations).

This is only a sampling of retention guidelines for tax-related documents. Please see our record retention schedule to create a personalized plan or contact your business advisor.

 

 

 

 

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Judy Kaltenbacher, CPA, Tax Partner
Judy has been in public accounting since 1985, with significant experience serving medical practices, real estate partnerships, S-Corporations, financial institutions, not-for-profit organizations and small business clients. She is experienced with providing tax planning for high net worth individuals and chairs the firm's medical/dental practice group. Learn more about Judy here.