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How Many Years Do I Keep Tax Returns – Tax season is in full swing. 1099s are being prepared for clients and data is being collected to send to clients’ tax auditors. In the spirit of the season, we’ve put together an infographic to print and keep on your desk. This guide will help you decide what tax records you want to keep, how long to keep them, and the best ways to protect your records. To start 2017 off on the right foot, follow this guide to help you organize and save your tax files for years to come.
If you have questions about taxes, the IRS has useful information on its website. Check out their online Tax Help tool for answers to frequently asked questions about tax law. Remember, the deadline to file your tax return is Tuesday, April 18, 2017.
How Many Years Do I Keep Tax Returns
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What Documents Do I Need To Keep On File?
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How Long Do I Have To Keep My Business Tax Records?
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Need to check documents and seal files? According to IRS law, you must keep business tax records for 3-7 years, depending on the type of record and when you filed your business tax return. Why do you need to keep business records long after you file your taxes? For one, if the IRS decides to search your business, they will want to see verified proof of things like your business expenses, tax returns, claimed deductions, etc. If you don’t have your information filed and organized, your business could face significant fines, or even criminal charges. Let’s take a deeper look at the different types of tax records and how long you should keep business records to make sure your business is protected when an audit comes up. Need quick answers? Use the links below to navigate each topic.
Why do I need to keep company tax records? Beyond just protection in the event of an IRS audit, there are many other reasons why it’s important for your business to keep up-to-date tax and financial records, including:
How Long to Keep Business Tax Records As a general rule, you must keep business tax records for at least 3 years, according to IRS law. You must keep your return and business tax records for 3 years from the date you filed the first return or 2 years after you paid taxes on that return. , whichever comes next. But keep in mind that other tax situations, such as not making a required income or not having a file, may require keeping your records for a long time.
Why three years? According to the IRS Small Business Page, there is a statute of limitations that limits the IRS audit period to 3 years after you file your tax return, for most tax situations. However, in most tax matters, there are exceptions to the 3-year rule that require your business to keep tax records for a longer period of time, or even forever. Exceptions to the Three-Year Rule Before discarding any financial records for tax purposes, consider the following:
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Takeaway: If you’re not sure whether or not you need a tax return or financial statement, just file it for safety. Or better yet, enlist the help of a tax professional to help you remove unnecessary red tape and identify exactly which documents you need to keep—your filing cabinet. to thank you. What business records must I keep? Now that you know why it is important to file your financial records and how long you should keep your business tax records, let’s take a closer look at the types of records to keep. Gross Income Gross income refers to the amount of income your business has earned over a period of time, including income outside of normal business activities, such as interest income, dividends, and tax returns. Some examples of gross receipts records include:
Sales Sales are the selling point of your business—what you buy and sell to your customers. This includes raw materials that can be used to produce the products you sell. Please submit the following documents to your sales department:
Sales your company might get. Examples of business expenses may include rent and utility bills. Submit these documents for your record of expenses.
Travel expenses and expenses can also include business travel and entertainment costs. These expenses often require more documentation than other deductions, as the connection to business profits may be less clear than other expenses. movement. Some examples of travel, transportation, entertainment, and gift expenses that your business should maintain include:
What Should I Keep And For How Long?
Assets Assets refers to the property your business owns and uses to operate; can include land, equipment and furniture. Since the value of these items can decrease over time, your records should reflect the rate of value gained or lost when the asset is sold. Your asset inventory should include the following information:
Always keep receipts, bank statements, bills and documents that support a tax deduction, credit or income that will appear on your tax return. Employment Taxes Employment tax filings have specific rules to follow, be sure to check the IRS Filing Guide for Employers to ensure compliance your business. The following employment tax records must be kept for at least four years:
The IRS isn’t always right, which is why it’s so important to keep tax records. Failure to keep these types of records can end up putting your business in a difficult position with an employment tax liability if the IRS does not believe you have paid your employment taxes. If you find yourself with a tax credit problem, you can contact a professional for a tax credit to help you collect the correct data for your business and employees. Tax Information You should keep your tax records from past years in addition to business expenses and related documents for your future tax preparation. Bank Statements Your bank and credit card statements are the main sources of information when the IRS audits your business. In addition, they provide you with useful financial information that can help you better manage your business. Fortunately, many banks provide detailed information online to easily identify incoming and outgoing funds, which helps reduce savings opportunities and organizational headaches. Phew!
