Posts Tagged "tax records"

Don’t let scant tax records be your downfall

Posted on May 21, 2018

Tax records should be kept year-round, not hastily assembled just for your annual tax appointment. Without tax records, you can lose valuable deductions or have unsubstantiated items disallowed if you’re audited. Generally, returns can be audited up to three years after filing. However, if income is underreported by more than 25 percent, the IRS can collect underpaid taxes up to six years later. In other words, you need good records to verify what you report on your tax return, and you should hang on to those records for seven years. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in McLean and Tysons Corner, VA. Gilliland & Associates is known for our superior knowledge and aggressive interpretation and application of tax laws. We help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+, LinkedIn, Facebook, and...

Read More

Tax records: What should you keep, and what can you toss?

Posted on May 31, 2011

Is your file cabinet overflowing? Do you hesitate to purge tax information because you’re not sure what to keep and what to discard? Here’s a quick guide to help you cut through the clutter. * Assets. Keep brokerage confirmations, equipment purchase invoices, mutual fund statements, and real property closing statements a minimum of seven years after you report the final taxable sale of the asset on your return. * Expenses. Substantiation for deductions includes charitable donation acknowledgments, receipts for employee business expenses, and automobile mileage logs. Retain these at least seven years after you file the return claiming them. * Income. The same seven-year rule also generally applies to common tax forms such 1099s showing interest, dividend, and capital gains from banks or brokerages, and Schedule K-1s from partnerships and S corporations. However, the IRS recommends holding on to your W-2s until you start collecting social security. Tip: Shred interim income reports once you’ve compared the totals to annual forms. * Retirement accounts. You may have to calculate the taxable portion of distributions, so keep records detailing your contributions until you’ve recovered your basis. * Tax returns. The statute of limitations is usually three years but can be six years if underreported income is involved. In cases of fraud or when no return is filed, the IRS has an indefinite time period for assessing additional tax. As a general rule, keep federal and state returns a minimum of seven years. For additional information, including how long you should store business papers and payroll reports, please call. We’ll be happy to help you establish a records retention...

Read More