DON'T LET SCANT TAX RECORDS BE YOUR DOWNFALL

Tax records should be kept year-round, not hastily assembled just for your annual tax appointment. Without tax records, you can lose valuable deductions or have unsubstantiated items disallowed if you're audited.

 

Generally, returns can be audited up to three years after filing. However, if income is underreported by more than 25 percent, the IRS can collect underpaid taxes up to six years later. In other words, you need good records to verify what you report on your tax return, and you should hang on to those records for seven years

THE IMPORTANCE OF MAINTAINING GOOD TAX RECORDS

Keeping your tax records organized year-round is a good practice and will keep you from hastily assembling your documents for your annual tax preparation appointment. If you are diligent about maintaining your tax records, you won't have to worry about losing a valuable deduction because you forgot to list expenses on your return, or having unsubstantiated items disallowed in the event of an audit.

Generally, your tax returns can be audited up to three years after filing. However, if income is underreported more than 25%, the IRS can collect underpaid taxes up to six years later. So, keeping good records means you'll always be able to verify what you report on your tax return. Hang on to your tax records for seven years.

TAX RECORDS – WHAT YOU SHOULD KEEP

It's that time of year when you are getting ready to sort out last year's financial records and prepare for this year's recordkeeping. Do you know what you should keep and what can you throw away? Here are some suggestions.