How long should I maintain my records?
The length of time you should keep a document depends on the action, expense, or event which the document records. Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out.
The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax. The information below reflects the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date.
Note: Keep copies of your filed tax returns. They help in preparing future tax returns and making computations if you file an amended return.
Period of Limitations that apply to income tax returns
- Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
- Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
- Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
- Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
- Keep records indefinitely if you do not file a return.
- Keep records indefinitely if you file a fraudulent return.
- Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
The following questions should be applied to each record as you decide whether to keep a document or throw it away.
Are the records connected to property?
Generally, keep records relating to property until the period of limitations expires for the year in which you dispose of the property. You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.
If you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property.
What should I do with my records for non tax purposes?
When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. For example, your insurance company or creditors may require you to keep them longer than the IRS does.
What should I do if I cannot pay my tax in full?
Don’t panic. If you cannot pay the full amount of taxes you owe, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. You also should contact the IRS to discuss your payment options at 1-800-829-1040. The agency may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise, or by temporarily delaying collection by reporting your account as currently not collectible until you are able to pay. In some cases, the agency may be able to waive penalties. However, the agency is unable to waive interest charges which accrue on unpaid tax bills.
What to do if I am a victim of identity theft?
Here’s what happens if you learn you are a victim of tax-related identity theft. For example, your e-filed return rejects because of a duplicate tax filing with your Social Security number, and you report the incident to us:
- You should file by paper if you are unable to e-file
- You should complete and file Form 14039, Identity Theft Affidavit, with your paper tax return
- Your tax return and Form 14039 are received for processing by the IRS.
- You’ll receive an acknowledgment letter
- Your case goes to our Identity Theft Victim Assistance (IDTVA) organization if another return is already present on the account, where it will be handled by employees with specialized training
- The Identity Theft Victim Assistance organization will work your case by:
- Assessing the scope of the issues and trying to determine if your case affects one or more tax years.
- Addressing all the issues related to the fraudulent return. This includes determining if there are additional victims, who may be unknown to you, listed on the fraudulent return.
- Researching the case to double check all the names, addresses and SSNs are accurate or fraudulent.
- Conducting a case analysis to determine if all outstanding issues were addressed
- Ensuring your tax return is properly processed and if you are due a refund, releasing your refund.
- Removing the fraudulent return from your tax records.
- Marking your tax account with an identity theft indicator, which completes our work on your case and helps protect you in the future.
- You will receive notification that your case has been resolved. This is generally within 120 days but complex cases may take 180 days or longer
- Certain tax-related identity theft victims will be placed into the Identity Protection PIN program and annually receive a new, six-digit IP PIN that must be entered on the tax return. The IP PIN adds an extra layer of identity protection. Some taxpayers will be given the option of getting an IP PIN, using the gov/getanippintool.
We tell you we have a suspicious return with your name on it
Often, the IRS Taxpayer Protection Program identifies a suspicious tax return bearing your name and SSN and will send you a notice or letter. There are many reasons why a return may appear to suspicious to us, and we take this precautionary step to help protect you. Here’s what happens in this situation:
- You may receive a Letter 4883C from the IRS asking you to verify your identity within 30 days.
- You follow the letter’s instructions to verify your identity:
- You must have the letter with you when you call the Taxpayer Protection Program. The toll-free number provided by the letter.
- You must have a copy of your prior-year tax return, if you filed one, to help verify your identity.
- If you are unable to verify your identity with the customer service representative, you may be asked to visit an IRS Taxpayer Assistance Center in person. You should plan on providing picture identification plus the letter and a copy of the tax return if you did file it.
- If you receive this or similar notices about suspicious returns, you do not need to complete the Form 14039 unless instructed to do so.
- Once you verify your identity with us, you can tell us if you did or did not file the return.
- If you did not file the return, it will be removed from your IRS records. You may be told you will need to file a paper return for the current filing season.
- If you did file the return, it will be released for processing and, barring other issues, your refund will be sent.
How quickly we can work identity theft cases depends upon the volume of work and the complexity of the cases. Once we completely resolve your tax account issues, we will mark your account with an identity theft indicator to help protect you in the future.
Certain tax-related identity theft victims will be placed into the Identity Protection PIN program and annually receive a new, six-digit IP PIN that must be entered on the tax return. The IP PIN adds an extra layer of identity protection. Some taxpayers will be given the option of getting an IP PIN, using the IRS.gov/getanippin tool.
Are there other steps I should take as a tax-related IDT victim?
You should also follow the recommendations from the Federal Trade Commission, such as contacting one of the three credit bureaus to place a free “fraud alert” on your credit records. See Taxpayer Guide to Identity Theft and FTC’s site, www.identitytheft.gov, for details.
You should also check with your state tax agency to see if there are additional steps to take at the state level.
Also, you should make sure you use good security software and other best practices to help you stay safe when you surf or shop on the web. Be alert to phishing scams intended to steal your sensitive data.
• Where’s My Refund -can we put a link to both the IRS and Michigan websites that would take clients to those specific areas in the referenced websites so taxpayers can look this info up?