Record Keeping

Well organized records make it easier to prepare a tax return and help provide answers if your return is selected for examination or if you receive an IRS Notice.

You must keep records such as receipts, cancelled checks, and other documents that support an item of income, a deduction, or a credit appearing on a return as long as they may become material, which generally will be until the limitations for that return expires.

Periods of limitations for assessment of tax:

  • 3 years– For assessment of tax you owe, generally, 3 years from the date you filed the return. Returns filed before the due date are treated as filed on the due date.
  • No limit– There is no period of limitations to assess tax when you file a fraudulent return or when you don’t file a return.
  • 6 years– If you don’t report income that you should have reported and it’s more than 25% of the gross income shown on the return, or it’s attributable to foreign financial assets and is more than $5000, the time to asset tax is 6 years from the date you filed the return.

Period of limitations for Refund Claims

  • The later of 3 years or 2 years after tax was paid- For filing a claim for credit or refund, the period to make the claim generally is 3 years from the date you filed the original return (or the due date for filing the return if you filed the return before the due date) or 2 years from the date the tax as paid, whichever is later.

7 years– For filing a claim for an overpayment resulting from a bad debt deduction or a loss from worthless securities, the time to make the claim is 7 years from when the return was due.