Taxpayer Supporting Documentation Flashcards
Why is it necessary to keep tax records?
To prove what you reported to the IRS
Records can include receipts, forms, and other paperwork.
How long should tax records be kept for most tax returns?
3 years from the date you file
If filed early, treat the filing date as the deadline.
What is the period of limitations in tax records?
The time you can change your return for a refund or the IRS can check for mistakes.
How long should property records be kept?
Until you sell the property and the 3-year period of limitations has ended.
What are two main purposes of keeping property records?
Calculate the value of the property and figure out taxes owed on any gain or loss.
How long should employment tax records be kept?
4 years after the tax is due or paid.
If you owe more tax, how long should you keep your records?
3 years.
If you forget to report income over 25% of what you earned, how long should you keep records?
6 years.
True or False: There is no time limit for keeping records if you file a false or fraudulent tax return.
True.
What is the record-keeping requirement if you don’t file a tax return?
No time limit (keep forever).
If you file a claim for a refund or credit, how long should you keep records?
3 years from filing or 2 years from paying tax (whichever is later).
How long should you keep records if you claim a loss from bad debt or worthless investments?
7 years.
List three tips for keeping tax records.
- Keep basic records
- Use any method that works for you
- Save proof of payments
What is an example of a basic record to keep?
W-2.
What should you do with receipts, canceled checks, or online payment confirmations?
Keep them to prove what you spent or paid.
