By Parag P. Patel, Esq.Last year, after ten years of debate, Congress passed legislation that…
Keeping Tax Papers
By Parag Patel, Esq.
Keep anything related to your tax return for at least three years after you file. Keep anything related to your tax return, such as W-2 and 1099 forms, and receipts and canceled checks for deductible items, for at least three years after you file. In general, the IRS has up to three years after you file your tax return to complete an audit of you. That is why you want to keep records substantiating your tax return data a minimum of three years. For example, if you filed on April 15, 1998 for 1997, keep those records until at least April 16, 2001.
To be completely safe, you’ll want to keep your records for six years. The IRS can audit you for up to six years after you filed a return if it suspects that you underreported your income by 25% or more.
Keep records showing purchases of real estate, stocks and other investments for at least three years after you sell the asset. If you are audited, you must be able to show your taxable gain or loss. If you have rolled-over gains from the sale of a residence, which was allowed under the previous tax law, keep records of every purchase and sale made, until you sell your current home.