Submitting your tax return can be a major relief, especially if you’re prone to procrastination. And while a good pat on the back is certainly warranted, you’d do well to file and organize your tax records before losing focus. Not only will these documents aid in preparing next year’s return, but also come in handy should you come under audit or require proof of income in the future. So which records should you keep and how long should you keep them? Below, Honolulu, HI tax attorney Allen N. Davey LLC, Attorney at Law, CPA offers a few professional recommendations.

Three Years

The IRS typically has a three-year window in which they can audit a tax return. As such, it is wise to hang onto your records for a period of three years from your filing date. In addition to expediting an IRS resolution, keeping these records can help you claim an additional credit and refund you may have missed the first time around.

Six Years

If your 1040 does not include all of your earnings, the IRS will have a longer audit window, which is six years to be exact. In such cases, having quick access to six years of tax documents is highly recommended.

Seven Years

Everyone makes a bad investment from time to time. However, if you choose to write yours off as a loss from worthless securities or bad debts, the IRS will have seven years to question your decision.

Forever

Some tax documents should never be thrown away. In cases of tax fraud, for example, there is no time limit for the IRS to pursue an audit. You should also hold onto any documents related to your retirement, investments, home, and other properties.  

Organization

When it comes to record-keeping, you are free to organize documents in whatever way you see fit, so long as you can locate and produce records when requested. However, many taxpayers now opt to maintain a digital database of their tax records to save on space and ensure ease of access.

If you require the aid of a tax attorney in Honolulu, HI, Allen N. Davey LLC, Attorney at Law, CPA is available to help. Backed by over 30 years of tax defense experience, Mr. Davey provides personalized and professional tax representation to individuals and business owners alike. Consultations are available. Learn more about his services online or call (808) 545-2222 to speak with the tax attorney directly.