The Internal Revenue Service can be an intimidating entity, so—out of caution—many businesses maintain their tax records for far longer than they need to. Tostrud & Temp, S.C., an experienced tax service and accounting firm in La Crosse, WI, explains below how long—and why—you should save your records. This information should help you save on storage space without running afoul of the IRS.
Tax Service Explains How Long to Keep Records
In general, you should save your tax records for three years from the date you filed the return. For instance, if you filed your 2017 return in April of 2018, you should keep all records, including copies of the returns themselves, W-2s, 1099s, mileage and expense documents, and any other supporting documents, until April of 2021. The reason for this is that the IRS is governed by a three-year statute of limitations, whereby both parties—you and the tax service—both have only 36 months from the filing date or the due date to request a refund or assess additional tax if income was not reported accurately.
However, there are exceptions to the three-year rule. For instance, the statute is extended for seriously under-reported income. If you believe you might have under-reported income by more than 25%, keep your records for at least six years beyond the filing date. Additionally, keep any tax forms for retirement accounts like an IRA for seven years, as well as any claim you file for bad debt or a loss of worthless securities. Once it's safe to discard these documents, shred them completely. They contain an enormous amount of personal information that criminals could use to commit identity fraud, so it is not safe to simply throw them in the trash. Make sure they are illegible, first.
The information above should help you archive your tax materials for the proper length of time. If you have further questions about recordkeeping or filing a return, contact Tostrud & Temp, S.C., the most trusted tax service in Western Wisconsin. They've been serving the region for more than 35 years and have a long record of timely, affordable service. Visit their website to learn more about the firm or call (608) 784-8060 to speak to an experienced CPA.