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Tax Law (Questions About Taxes)/how long should keep tax returns?

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Question
I have copies of my personal IRS tax returns from over 10 years ago, stashed away in a shoebox. How long do you suggest people keep copies of their returns? Thanks

Answer
Lee,

Thanks for your question.

The IRS can audit a return for three years from the date filed or due date, whichever is later.  So, for most people, that means that 2010 is still an active return until April 15 since it was due April 15, 2011.

Beyond three years, you should keep a return that has anything related to future returns.  For example, if you have a capital loss carry forward, keep the return for the year in which that originated until used up.

The exception to that would be if there is a possibility that you have or may be accused of under-reported income by 25 percent or more. Then you'll need to keep tax returns and all related information for six years. When there is substantial activity from a closely held business, or the cost basis records for property or securities sold are unclear, under-reporting income is a real possibility.

An additional exception would be if there is fraud.  There is no statute of limitations on fraud, so the IRS can audit a fraudulent return at any time. In the event of a fraud investigation, you would need to have your tax information.  However, for most individual taxpayers with little other than W-2 wages, this should not be much of an issue.  If you have committed fraud, keep your records in order to limit the amount of fraudulent activity they may assess you with.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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