How long do I keep my records?

One of the most frequent questions we get asked is how long to keep records. Under normal circumstances both business and personal returns can be audited for 3 years after the filing date. So all records should be kept for 4 years. These records include bank statements, check registers, and receipts. Basically anything that will prove your income and deductions.

Under some circumstances, the 3 years can be extended to 7 years or even forever, depending on the amount of income that IRS believes to be understated. For this reason, the following records should be kept forever:

  • Tax returns, including gift tax returns
  • Bank Statements
  • Proof of cost and improvements on real estate
  • Proof of the cost of any other items that will be sold at a later date
  • Proof of any deposits that are not income, such as gifts, loans, inheritance

If you are audited, IRS will compare the gross income on the returns to the deposits on the bank statement, which is why you want to keep these items. If your deposits are more than the income, you will need to prove that the deposits are not income.

Payroll returns should be kept for 7 years

What do I do if I receive a phone call from the IRS?

Most phone calls claiming to be from the IRS are scams. If the IRS does contact you by phone, they will not demand immediate payment or ask for bank account information or any other personal information and they will not threaten to sue you or arrest you. If you receive a phone call from the IRS and suspect it is a scam, hang up immediately. In the event that you do owe money to the IRS, you will always be contacted by mail. For more information from the IRS regarding scams and how to report them, follow this link www.irs.gov/uac/Report-Phishing. If you do receive a letter from IRS, please send it to us to look over.

What do I do if I receive an email from the IRS?

The IRS does not use emails, texts, or social media to contact people. If you receive and email claiming to be from the IRS, you should delete it immediately, do not reply to it and do not follow any links in it. If the IRS needs to contact you, they will do so by mail. For more information from the IRS regarding scams and how to report them, follow this link www.irs.gov/uac/Report-Phishing