February 23, 2019
As you are collecting your tax documents for this year’s tax return (or stuffing them in a file drawer if your return has already been filed), you may be wondering: “How long to I need to keep this stuff?”
The general rule is that you should keep all documents that prove the information on your tax return until that return can no longer be audited, and interest and penalties can no longer be assessed. In most cases, a federal income tax return can be audited, and penalties and interest assessed, for up to 3 years after the later of the return’s due date, or the date the return was filed. If you omitted 25% or more of your gross income from your return, the deadline is increased to 6 years. If you do not file a tax return for the year, there is no time limit. Each state has its own set of tax laws, and its statute of limitations (a.k.a. auditing and assessing time limit) may differ from the federal statute. Michigan’s statute of limitations is 4 years from the later of the return due date or date of filing.
It is important to note that the documents that prove your current-year tax return entries might be from earlier years. Common situations where you will need documents from earlier years are sales of stocks, homes and rental properties. When you purchase these items, you will need to keep the settlement statements or other purchase documents until the statute of limitations for the year they were sold has expired. You will also need to save receipts or invoices that show the cost of renovations on your home or rental properties.
While the records that back up your tax return entries should be saved until the statute of limitations for the return has expired, the returns themselves should be kept forever.
The statutes of limitations for business returns and other types of returns, in many cases, differ from those for individual income tax returns. If you would like to know how long to keep business records, or documents related to any other type of return, please contact our office.
With scam artists hard at work all year, taxpayers should be on the lookout for a surge of evolving phishing emails and telephone scams.
Taxpayers should watch for new versions of two tax-related scams. One involves Social Security numbers related to tax issues. The other threatens taxpayers with a tax bill from a fictional government agency. Here are some details about these scams to...
As the month “Marches” on, and we at LBF are in full tax season mode, we want to remind those of you whose returns we have finished to please get us your 8879 electronic filing form ASAP so we can file your return (which we will not do without this form), and assure your filing is timely. Also, remember that even if you owe taxes (we hope you don’t), the IRS will not be...
Many people receive tax refunds from the IRS and wonder how long it will take to receive your refund. You wait by the mailbox or look at your bank account hoping that your refund is there. We will fill you in on the tax refund schedule and how long it takes for the IRS to issue refunds.
When Are Taxes Due?
The deadline to submit your 2018 tax return and pay...