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You shredded WHAT? How to fill
in gaps in your tax record
By Cora M. Barnhart •
Bankrate.com
Keeping records may not make the
front page of the financial news, but this chore can make or break
a small business -- not to mention put the owner in hot water with
the IRS.
Right from the start of a business, having
copies of your old tax records is vital. Most lenders require several
years' worth of personal tax forms before they'll give you the time
of day -- or a big check.
Then, as a business continues, so will the paper
trail. And the next time you need capital, or if your number comes
up and the IRS decides to audit you, there they are again, demanding
you cough up your tax records.
Uh-oh
So we've made the case that tax records are vital. Uh-oh, you may
be thinking -- you're missing some.
Say there's a gap in your tax records, for whatever
reason. You may not be the best record-keeper in the world. There
may have been a fire or an excessively itchy trigger finger at the
paper shredder. Or, updating the "dog ate my homework"
excuse you used in third grade, your computer's hard drive ate your
data.
Not to worry. If you need to replicate a previously
filed return, you will have to file Form
4506. The IRS charges a $23 fee for each tax period requested.
And it could take some time: up to 60 calendar days to get a copy
of a tax return or W-2s.
Transcripts
come more quickly
Are you in a hurry? If the return you need is in the 1040 series
(Forms 1040, 1040A, 1040EZ, etc.), request a Tax Return Transcript.
The transcript reports line items from the original return. A transcript
satisfies many requests for old tax records, such as those of lending
institutions. You should probably count on receiving the transcript
10 business days after the IRS receives your request. There isn't
a charge for transcripts or W-2s.
You also should request a Tax Account Transcript
if you need a statement of your tax account that reports any changes
that you or the IRS made to the original return. Write or visit
an IRS office or call the IRS number listed in your telephone directory.
Don't
do it again
Now that you know how to fill in the gaps, be careful about creating
new ones.
Business owners shouldn't throw away a record
until the period of limitations for any tax return supported by
that document expires. This is the period of time in which either
a business owner can amend a return or the IRS can charge additional
tax. Limits
for filed returns range between three and seven years. There are
additional requirements for keeping paperwork
regarding employees.
And one more thing. Keep that paper shredder
at arm's length.
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