Basic records are documents that everybody should keep. Although the Internal Revenue Service doesn't require you to keep your records in a particular way, it does urge taxpayers to keep them "in an orderly fashion" and in a safe place.Basic recordsFOR items concerning your ...KEEP as basic records ...IncomeForm(s) W-2 Form(s) 1099 Bank statements Brokerage statements Form(s) K-1ExpensesSales slips Invoices Receipts Canceled checks or other proof of paymentHomeClosing statements Purchase and sales invoices Proof of payment Insurance records Form 2119 (if you sold a home before 1998)InvestmentsBrokerage statements Mutual fund statements Form(s) 1099 Form(s) 2439How long you should hang on to recordsIF you ...THEN the period is ...Owe additional tax and the next three situations below do not apply to you3 yearsDo not report income that you should and it is more than 25 percent of the gross income shown on your return6 yearsFile a fraudulent returnNo limitDo not file a returnNo limitFile a claim for credit or refund after you filed your returnLater of 3 years or 2 years after tax was paidFile a claim for a loss from worthless securities7 yearsAlso keep in mind that while the basic IRS review period is three years, there are exceptions -- in the tax collector's favor.If the agency suspects you've underreported your income or has questions about a worthless stock write-off, look out. When examiners believe you've shorted your income amount on a return by 25 percent or more, they can come asking questions up to six years later. Add another 12 months for queries about that bad investment.More details on tax record keeping are available in IRS Publication 552, Recordkeeping for Individuals. advertisementRelated Links:Sales tax holidays offer shopping bargains2009 tax holiday scheduleWhen a HELOC is used for a businessRelated Articles:Deduct COBRA paymentsTax fears worry saverHousing credit tax cheats
Basic records are documents that everybody should keep. Although the Internal Revenue Service doesn't require you to keep your records in a particular way, it does urge taxpayers to keep them "in an orderly fashion" and in a safe place.
Also keep in mind that while the basic IRS review period is three years, there are exceptions -- in the tax collector's favor.
If the agency suspects you've underreported your income or has questions about a worthless stock write-off, look out. When examiners believe you've shorted your income amount on a return by 25 percent or more, they can come asking questions up to six years later. Add another 12 months for queries about that bad investment.
More details on tax record keeping are available in IRS Publication 552, Recordkeeping for Individuals.