Be Prepared, the IRS is Auditing an additional 5,000 Corporations in addition to aggressively auditing Individual Tax Returns.
The US Deficit has reached Eight Trillion dollars which works out to be over $29,000 per US citizen.
Tax records: You should keep tax records for at least as long as it is possible for tax authorities to audit your return. Generally, the IRS has three years after the return is due or filed. This is called the "statute of limitations." If you’ve made a major error on your return (defined as omitting more than 25% of your gross income), the IRS has six years to examine your return. There is no statute of limitation for fraudulent filing or for returns that are not filed at all.
To be on the safe side, keep your tax records for seven years after a tax return is filed.
Keep checks, receipts, and other records that document the income and deductions you report on your tax return. Copies of tax returns themselves should be retained permanently.
Home: Expenditures for your home fall into two categories: “repairs” (such as routine yard maintenance and painting) and “improvements” (usually big-ticket items such as room additions).
Investment records: Investment records generally should be kept until the investment is totally liquidated, plus a period of seven years.
Investment real estate: Keep all documents relating to purchases of property, along with substantiation for improvements made to the property. Keep written appraisals and tax depreciation schedules.
Individual retirement accounts: Keep copies of Forms 5498, 8606, and 1099R until all money has been withdrawn from your IRAs. Good records are necessary so that you are not taxed on nontaxable withdrawals.
Estate planning documents: In your home, keep a copy of your current will, any trusts, and any special directives. Give the originals to your attorney, and consult your attorney about destroying all out-of-date documents.
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Written by Ben Lawler, CPA
CEO & President of ProActive Advisors, Inc.