After your taxes are filed, what do you do with the documents? Do you keep them or shred them? And if you keep them, how long are you supposed to keep them?
We recommend that you hold onto your returns in case of an audit. This would mean holding on to them for 3 years after the tax return is filed or 6 years if you understate your taxable income by 25% or more, including understating the taxable value of property transferred to you. Also, keep in mind that each state has its own statute of limitations. Most states allow 6-12 months after the federal window to allow the state time to react to any federal tax law changes. Additionally, if you amend your federal taxes, the IRS has 60 days to review the revisions. This may add time to the tax audit window.
Some records that you should always hang onto, such as:
Copies of historic tax returns
Records of purchase or sale of large items like homes and vehicles
Copies of other investment purchases or sales
If you have any questions regarding your tax situation, please do not hesitate to contact us and we would be happy to help.
Shelly Casella-Dercole joined the firm in 1998, and her name went on the door in 1999. She now serves as the Managing Partner of the firm. "As a business owner myself, I understand the complexities and challenges business owners face, and I strive to add value by helping clients understand their financial statements, manage tax consequences, and clearly see the financial and tax ramifications — both positive and negative — of decisions they make," she explains. "Without good financial information, it’s like driving a car blind, but with good information, clients are able to maximize profits."