Tweet

Tax Documents you must Maintain

Guest post by: Krutika Chheda

Article Overview: What a great year this year has been for the tax payers in the US. Perhaps this may have been the best year for tax payers to get tax refund in recent history. We shall wait for the official figures from the US treasury, but from what we have seen at K&M Accounting and Tax Services in Charlotte, this year has been a bonanza of huge tax refunds for our clients. Now that the tax returns have been filed, what to do with all the paperwork and documents? This may be a good time to clean out the growing pile of tax and financial papers that clutters your home and office. Here's a list of what you need to keep

Tax Documents you must Maintain

IRS Statute of Limitations - Three Year Rule

This rule limits the number of years that IRS can audit your tax returns. For assessment of additional taxes, the statute of limitation runs generally three years from the date you file your return. The idea behind this is that after a period of years, records are lost or misplaced and memory isn't as accurate as well. Once the statute of limitations has expired, the IRS can't go after you for additional taxes. However there are exceptions to this general three year rule:

· Failure to report all income (Remember IRS expects you report your global income) and the unreported amount being more than 25% of the income shown on the return, increases the limitation period to six years.

· Claiming loss from a worthless security increases the limitation period to seven years.

· If you file a 'fraudulent' return, or don't file at all, the limitations period never begins to run. The IRS can get you at any time.

Assuming that you've filed on time and paid what you should, you only need to keep your tax records for three years, but some records have to be kept longer than that.

Check List of Tax Documents you must Maintain

Employment, bank and brokerage statements: All W-2s, 1099s, brokerage and bank statements that prove your income must be maintained for at least three years.

Itemized Deduction expense documents: In case you itemized your deductions you will have to maintain all the expense receipts, mileage logs and other documentation that help substantiate your expenses. Remember, with IRS the rule during an audit is you prove it or loose it! At K&M Accounting and Tax Services we recommend our clients to maintain a scanned backup of their documents on our client portal in case you misplace or loose the originals.

Business records: Business records can become a nightmare to maintain. Since your income is not directly reported to the IRS as in the case of a salaried W2 income, the IRS is even more stringent when it comes to checking business records. If you have a sole proprietorship and have filed business loss on your personal return, make sure you maintain all possible income and expense records.

Tax returns: Keep copies of your tax returns for at least 3 years. Those of you that are in the midst of the immigration process may want to hold on to the tax returns at least until after your immigration case is completed. At K&M Accounting and Tax Service, we recommend our clients to hold on to the tax returns for at least 3 years after the immigration case is completed.

Social Security Records: Check with the Social Security Administration each year to confirm that your payments have been appropriately credited. If the Social Security Administration records are wrong, you will need the W-2 or copy of your Schedule C (if you are self employed) to prove the correct amounts. Don't dump those records until after you've validated those contributions.

Keep in mind this column and the articles published here are only meant to provide you with high level information about tax and business matters and in no way should you consider this as tax advice. Consult your tax advisor regarding your individual tax situation.

This Article provides only an overview to the complex Tax Laws. It is not exhaustive nor a substitute for Independent Tax Advice provided by a Tax Accountant or a Tax Attorney familiar with your case.

Related Articles
  Company Incorporation in Hong Kong and China
  Company Registration in Hong Kong
  Wills: Software Package vs. Lawyer
  Nonprofit Board Member Manuals - What Should You Include?
  Company Incorporation in Asia
  BVI Company Incorporation
  Use Google Docs To Edit and Share Documents in the Cloud
  THE APOSTILLE PROCESS
  Documents of title to the goods in international sale transactions
  Home Business Resolution = More Organization
  Writing The Plan
  Employer Guide to Employment Verification Requirements
  Tips to Getting an Unsecured Line of Credit For Your Business
  Hong Kong Company Incorporation
  Great Time Saving Ideas for the Busy Work At Home Mom
  Computerized Paper Management - Organize For Productivity, Profit and Peace-of-Mind? (Part4)
  Strict compliance in letters of credit transactions
  Learn How Small Law Firms Are Effectively Using Virtual Assistants
  Why Your Financial Statements Are Important
  Create a Personal Financial Survival Plan

Article Tags: accounting, bush administration, effective tax rate, home buyers, massive tax cuts, tax documents, tax incentives, tax payers, tax refund, tax refunds, tax returns, us treasury



Related Forum Posts
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.
Re: Free Word-Count Tool - When I am at home I use word, if not I use Google Documents, it has a word counter too, the amazing thing is that it always gives a different number than the word document. Carol I agree with you on FireFox, they have the greatest add-ons, I also use the spell checker, I can't do without it, I am crossing letters.
Re: Are Business Owners too Old School to be Sold by a blog - [quote:140e27hj]Customers Pick Static Documents over Blog Entries 8 to 1 on Average[/quote:140e27hj] Interesting study. Just as a commenter said on your post... don't call it a blog. I agree.
Re: Are Business Owners too Old School to be Sold by a blog - [quote="RussellWebb":34fthubv][quote:34fthubv]Customers Pick Static Documents over Blog Entries 8 to 1 on Average[/quote:34fthubv] Interesting study. Just as a commenter said on your post... don't call it a blog. I agree.[/quote:34fthubv] Yep, I agree with him (and you.) I don't think that the readers really have any problem looking at the blog once they've been sent to it, but it's just the word "blog" that's causing the problem.
Re: Great start, but no finish - My advise is FOCUS on your business. Focusing is the main factor to succeed on business. If you have a great idea, then follow it only, don't look anywhere else. It is especially essential in an online business. Because there are a lot of mind blowing sales letters promising millions dolllars or overnight success, people find it difficult to concentrate on one business and they lose their energy. Concept is simple. 1- Have a good idea; 2- Build your business on it; 3- Monetize your business; 4- Promote it; 5- Build list of responsive customers; 6- Maintain You Business. Focusing and not fearing from competition (instead you can learn from competitiors) are main tips of billionaires ,BTW. Orxan


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Ten Steps to Go from Idea to E-book for Sale

The Importance of Master Data Management (MDM)

How To Master The Ins and Outs of Google+

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.