Federal law requires you to maintain copies of your tax returns and supporting documents for three years. But, this is just for those years we call the open years. The IRS has 3 open years to look over your returns and assess additional taxes or audit the information. However, if the IRS believes you have underreported your in income by 25% or more than they may go back six years in an audit. If you do not file at all or there is an indication of fraud then all bets are off and there is no time limit. So what is the best practice for keeping returns and documents? Here is a comprehensive list of documents and the suggested time frame for keeping them.
Personal Documents To Keep For One YearWhile it's important to keep year-end mutual fund and IRA contribution statements forever, you don't have to save monthly and quarterly statements once the year-end statement has arrived.
Personal Documents To Keep For Three Years
Chris has been working in the industry for over a decade and has a passion for ensuring her clients have the best service in the area of taxation, accounting and bookkeeping.