by Fresh Start Tax | Dec 6, 2016 | Tax Help
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
1. Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
2. 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.
3. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
4. 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.
5. Keep records indefinitely if you do not file a return.
6. Keep records indefinitely if you file a fraudulent return.
7. 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.
by Fresh Start Tax | Dec 6, 2016 | Tax Help
Here is a free Sample letter you can use to avoid penalties!!!
Reasons for Late Contribution:
I intended to make the rollover within 60 days after receiving the distribution but was unable to do so for the following reason(s) (check all that apply): ___ An error was committed by the financial institution making the distribution or receiving the contribution. ___ The distribution was in the form of a check and the check was misplaced and never cashed. ___ The distribution was deposited into and remained in an account that I mistakenly thought was a retirement plan or IRA. ___ My principal residence was severely damaged. ___ One of my family members died. ___ I or one of my family members was seriously ill. ___ I was incarcerated. ___ Restrictions were imposed by a foreign country. ___ A postal error occurred.
Name
,Address,
City, State, ZIP Code
Date: ______________________ -5- ___ The distribution was made on account of an IRS levy and the proceeds of the levy have been returned to me. ___ The party making the distribution delayed providing information that the receiving plan or IRA required to complete the rollover despite my reasonable efforts to obtain the information.
Signature I declare that the representations made in this document are true and that the IRS has not previously denied a request for a waiver of the 60-day rollover requirement with respect to a rollover of all or part of the distribution to which this contribution relates.
I understand that in the event I am audited and the IRS does not grant a waiver for this contribution, I may be subject to income and excise taxes, interest, and penalties.
If the contribution is made to an IRA, I understand you will be required to report the contribution to the IRS. I also understand that I should retain a copy of this signed certification with my tax records.
Signature: ________________________________
by Fresh Start Tax | Dec 6, 2016 | Tax Help
Tax Preparedness Series: How to Avoid a Refund Delay;
This is the second in a series of reminders to help taxpayers prepare for the upcoming tax filing season.
As tax filing season approaches, the Internal Revenue Service is reminding taxpayers about steps they can take now to ensure smooth processing of their 2016 tax return and avoid a delay in getting their tax refund next year.
The IRS reminds taxpayers to be sure they have all the documents they need, such as W-2s and 1099s, before filing a tax return.
You may also need a copy of your 2015 tax return to make it easier to fill out a 2016 tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income amount from a prior tax return to verify their identity.
Learn more about how to verify your identity and electronically sign your tax return at Validating Your Electronically Filed Tax Return.
The IRS will begin accepting and processing tax returns once the filing season begins. Under the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), any Individual Taxpayer Identification Numbers (ITIN) issued prior to 2013 or that haven’t been used for tax-years 2013, 2014 and 2015 will no longer be valid for use on a tax return as of Jan. 1, 2017.
Individuals with expiring ITINs who need to file a return in 2017 will need to renew their ITIN.
This process typically takes 7 weeks to receive an ITIN assignment letter, but the process can take longer – 9 to 11 weeks if taxpayers wait to submit Form W-7 during the peak filing season, or send it from overseas. Taxpayers who do not renew an expired ITIN before filing a tax return next year, could face a delayed refund and may be ineligible for certain tax credits.
For more information, visit the ITIN information page on IRS.gov. If you claim the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) on your tax return, the IRS must hold your refund until February 15. This new law requires the IRS to hold the entire refund — even the portion not associated with EITC or ACTC.
This change helps ensure that you receive the refund you are owed by giving the agency more time to help detect and prevent fraud. The IRS always cautions taxpayers not to rely on getting a refund by a certain date, especially when making major purchases or paying bills.
Though the IRS issues more than nine out of 10 refunds in less than 21 days, some returns are held for further review. The easiest way to avoid common errors that delay processing a tax return is to e-file. E-file is the most accurate way to prepare a return and file.
There are a number of e-file options: • IRS Free File, • Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs, • commercial tax preparation software, or • a tax professional Use Direct Deposit.
With direct deposit, the refund goes directly into the taxpayer’s bank account. There is no risk of having the refund check stolen or lost in the mail.
This is the same electronic transfer system used to deposit nearly 98 percent of all Social Security and Veterans Affairs benefits into millions of accounts. Direct deposit also saves taxpayer dollars.
It costs the nation’s taxpayers more than $1 for every paper refund check issued but only a dime for each direct deposit made.
