Ask TaxMama ... Keeping Score - Uh, Records ... ... March 8, 2002

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Keeping Score - Uh, Records ...

ť From: Clio, MI

Dear TaxMama:

How long do you have to keep your tax records?

Wally

Hi Wally,

As I like to tell people, keep your tax returns forever. They don't take up much space. And if IRS or any tax agency comes back to you decades from now, claiming you never filed a return for that year, you can drag out that crumbling, yellowing mess and fax it to them.

As to the statute of limitations, IRS can only audit you for 3 years after the filing date (or due date) of your return. (Whichever is later. e.g. you filed on 2/15, but the due date is 4/15 - IRS can audit until 3 years from the 4/15 date.)

Your state, I don't know. States usually add one or two years to the equation. Since, once IRS finds a problem, the states want time to get the benefit of collecting their share of your taxes from that audit.

For certain fraudulent returns .... the Federal Statue is 7 years. For some issues - it may be longer.

But you may want to keep some records longer:

Anything relating to your home, real estate, assets, improvements etc. -

Keep those as long as you own the properties plus the statue periods

Business vehicles -

Keep those as long as you own the properties plus the statue periods

Stocks and investments -

Keep all purchase and reinvestment records as long as you own the securities + the statue periods. You will need the information as you sell each stock.

I hope that doesn't confuse you thoroughly.

Good luck.

Best wishes,

Eva Rosenberg
Your TaxMama

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