Well-organized records make it easier to prepare an accurate income tax return next filing season. The Internal Revenue Service encourages individuals to gather the adequate documents that can also help provide answers if their return is selected for an audit or to prepare a response if they receive an IRS notice.
“It’s important to keep records throughout the year so you can file a complete return,” said Clay Sanford, an IRS spokesman. “Plus, you don’t want to forget something that could have qualified for a tax deduction.”
If the IRS ever questions an item on a taxpayer’s return, their records will help explain any item and arrive at the correct tax. Records such as receipts, canceled checks and other documents that support an item of income, deduction or credit appearing on a return must be kept as long as they are relevant under federal tax law.
Generally, this will be until the statute of limitation expires for that return. For assessment of tax owed on a timely-filed return, this usually is three years from the due date of the return.
Although the law does not require any special form of records, be sure to keep all receipts, canceled checks or other proof of payment and any other records to support any deductions or credits claimed. Also, for any refunds claimed, a taxpayer’s records must show that they actually overpaid their tax.
“All requirements that apply to hard copy books and records also apply to electronic storage systems that maintain tax books and records,” Sanford added. “When replacing hard copy books and records, make sure to maintain the electronic storage systems for as long as they apply under federal tax law.”
Copies of tax returns can help prepare future returns and could be needed if filing an amended return or for an audit. Copies of past returns and other records can also be helpful to the survivor or executor or administrator of a taxpayer’s estate.
If necessary, request a copy of a return and all attachments (including Form W-2) from the IRS by using Form 4506, Request for Copy of Tax Return.