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IRS CIRCULAR 230 NOTICE:
To ensure compliance with requirements imposed by the IRS, we inform you that
statements on this website, that could be construed as federal tax advice, are not intended or written to be used and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or
regulations of other governmental taxing authorities or agencies. Furthermore, this website is not intended or written to support the promotion or marketing of any tax schemes.
Date last modified:
10/11/11
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Important
Documents to Keep
The following are guidelines for keeping important tax, financial and legal
documents. When you are ready to discard sensitive papers, do so
appropriately to protect your identity and security. Remember that when
dealing with most taxation entities, the burden of providing adequate proof
is on the taxpayer.
Tax Returns
Keep indefinitely! They can be scanned and kept as electronic files
burned onto a CD. As long as the tax return does not involve fraud, tax evasion or
substantial understatement of income, the IRS only has a three-year timeframe
(from the filing date) in
which to request proof of the numbers on the return.
Cancelled checks, Invoices, Statements and
Receipts
Keep them for seven years if they document deductions on a tax return. If they do not
substantiate a tax return (personal, non-deductible expenses) discard after a
year or two.
Receipts for Property Improvements
Keep as long as you own the property and for seven years after the property
is sold, whether it is your primary
residence, a rental or an investment. Improvements affect the basis (cost)
and may be critical in calculating gain on the sale. Laws regarding
taxable gain could change in the future.
Escrow Statements
Keep for seven years after you sell the property, whether it is your primary
residence or investment property. This includes all escrow statements from
refinancing.
Brokerage Statements and Buy/Sell Confirmations
Keep documents reporting purchases of stocks and mutual funds in order to document basis
and calculate gain or loss when the issue is sold. Keep documents reporting and relating to sales for
seven years. Brokerage statements should be kept if dividend reinvestments
are reported on them, as they can be used to calculate basis.
Business Books
Keep a copy of your company books indefinitely. Make and store a back-up
of computer files off of your computer. Some programs will allow you to
print reports and ledgers in PDF format, which can also be stored
electronically. |
