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Most everyone has a monster file cabinet or file box (or dumpster?) where tax records are kept – and you find yourself wondering if keeping all this junk is really necessary…
The IRS recently published their Tax Tip 2012-71, which discusses how you should go about managing your tax records. The actual text of the Tip is listed below:
Managing Your Tax Records After You Have Filed
Keeping good records after you file your taxes is a good idea, as they will help you with documentation and substantiation if the IRS selects your return for an audit. Here are five tips from the IRS about keeping good records.
- Normally, tax records should be kept for three years.
- Some documents – such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property – should be kept longer.
- In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.
- Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.
- For more information on what kinds of records to keep, IRS Publication 552, Recordkeeping for Individuals, which is available on the IRS website at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Sterling Raskie, MSFS, CFP®, ChFC®
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