FOR BREAKING NEWS VISIT WWW.QNS.COM AUGUST 3, 2017 • THE QUEENS COURIER 21
How Long To Keep Tax Returns and Records?
BY JOHN SAVIGNANO, CPA
The answer depends on the type
of document and also the kinds of
transactions you engaged in.
You should keep returns at least
three years. As a general rule, that’s
how long the Service has to question
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items on your return and to
bill you for any additional tax.
It’s also the time frame for you to
file an amended return and seek
a refund. However, the IRS can
go back up to six years if a return
omits more than 25% of income. If
fraud is proved, there is no limit.
State tax returns may have to be
retained longer.
Don’t automatically throw out
all returns and records after three
years. Look over the old documents
to see if you might need any parts
of them in the future. Hold on
to records that help establish the
adjusted basis of real estate. You
should have a separate file for each
piece of realty you own, including
your home. Retain the files until
at least three years after you dispose
of the property. Ditto for securities
transactions. Be sure to keep
your purchase documents for taxable
mutual funds, stocks and the
like. You’ll need to include the purchase
date and cost on your return
in the year you sell the assets.
Among other records to keep:
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Those showing stock splits, dividend
reinvestments and nontaxable
distributions.
Heed this advice for property that
you either inherited or received as
a gift. For inheritances, you’ll need
to know date-of-death value. For
gifts…the donor’s cost. So you’d be
wise to keep documentation of these
figures until after you sell the asset.
If you’ve made nondeductible
payins to IRAs or post tax payins
to 401 (k)s…you should keep
records until three years after the
accounts are depleted. Be sure to
file Form 8606 to report nondeductible
IRA contributions. If you
don’t, those contributions will be
treated the same as deductible payins
when withdrawn. And remember
that all distributions from your
traditional IRA will be subject to
tax unless you can show otherwise.
So make sure you retain copies
of Form 8606 and your 1040s
for each year that such payins are
made. It would also behoove you
to keep Form 5498 or similar statements
that reflect the amount of
IRA distributions.
Businesses should keep payroll
tax records for a minimum of four
years after the due date for employees
to file their income tax returns
for the particular year. Data to be
retained include wage amounts,
payment dates and employee
information. Also, copies of all
W-4 forms, payroll returns and
amounts and dates of tax deposits.
Copies of worker health coverage
forms should be kept at
least three years after the deadline
for filing these documents.
These are the 1094 and 1095 forms
that many employers are required
to file to report employee health
insurance data. Records on cost of
assets, depreciation, etc., should be
retained for decades.
John Savignano is a partner with
Savignano Accountants & Advisors
located at 47-46 Vernon Blvd.,
Second Floor, in Long Island City.
If you have any questions or require
additional information, please call
John at 718-707-0955.
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