How Long Should I Keep My Tax Records + Former Agent Answers

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Michael Sullivan Fresh Start Tax Expert

 

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 nontax 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.

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Free Sample Letter For Late Contributions for IRA, Retirement Rollovers

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  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 … Continue reading

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Tax Preparedness Series: How to Avoid a Refund Delay;

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    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 … Continue reading

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Michael D. Sullivan + Former IRS Quoted on Donald Trump Audit

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    Thanks to Nixon, President Trump’s taxes will be audited automatically every year President-elect Donald Trump waves as he arrives at the Trump National Golf Club Bedminster clubhouse, Sunday, Nov. 20, 2016, in Bedminster, N.J. Carolyn Kaster AP By Kevin G. Hall and Greg Gordon khall@mcclatchydc.com WASHINGTON: When Donald Trump is sworn in as the nation’s 45th president, his complex business empire will immediately be subject to an audit by the Internal Revenue Service. Thanks to an obscure provision in the IRS manual, Trump and his vice president, Mike Pence, will each be under a mandatory audit annually. “The requirement for mandatory audits of the tax returns of the president and vice president dates back to the Watergate era in the 1970s,” the IRS said in a statement to McClatchy, noting that nonpartisan career employees adopted the requirement. “Since then, this provision has remained in place during both Republican and Democratic administrations as well as under IRS Commissioners appointed by both parties.” The little-known provision in the IRS manual spells out strict rules under which the returns are audited. … Continue reading

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Former IRS Agent, Teaching Instructor + Ask Me Question about IRS

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    Michael D. Sullivan    1-866-700-1040 Former IRS Agent & Teaching Instucting Michael D. Sullivan is one of the founders of Fresh Start Tax LLC. He had a distinguished career with the Internal Revenue Service for 10 years. As a veteran IRS Revenue Officer / Agent, he served as an Offer in Compromise Tax Specialist and Large Dollar Case Specialist. He also collaborated with the U.S. Attorney’s office on undercover operations. Michael received several awards for his work and dedication as a IRS Agent . During his tenure with the IRS, he was a Certified Tax Instructor who taught out of the Atlanta Regional IRS Training Offices. He also taught out of the local and district offices of the IRS. Mr. Sullivan trained many of the new IRS Agents. Michael has been in private practice for the last 34 years in the field of Taxpayer  Consultation for IRS Audit and Collection tax resolution issues. He often consults with corporations and individuals, which involves a wide range of tax issues. Michael has worked many large complex cases for high net worth … Continue reading

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How To Get Your Offer in Compromise Accepted + Former Agent Speaks

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    How To Get Your Offer in Compromise Accepted   We are true tax experts for the IRS offer in Compromise. As a former Agent, I worked the offer program for the IRS. We are true experts in the process of settling your IRS tax debt. To get your IRS offer in compromise accepted, you must know the system. The Internal Revenue Service is very particular about what offers are accepted and will look to reject an offer in compromise faster then they will to accept it because of the amount of work they have to put in. Also, each offer in compromise accepted becomes a matter of public record for one year at the regional offices. The offer in compromise must be signed off by three different people before is accepted so much caution is given before IRS simply signs their name even if an offer makes common business sense. The offer must be filled out correctly and accurately and all documentation needs to be given before any offer is accepted. The best chance of having an offer … Continue reading

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What You Need to Know + IRS Tax Debt Settlements + Former IRS Settlement Officer

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    The process of settling Your Tax Debt with the IRS, What you Need to Know   We are true tax experts for the IRS offer in Compromise. As a former Agent, I worked the offer program for the IRS. We are true experts in the process of settling your IRS tax debt. There are ads all over the television and the Internet is draped with splash ads and companies advertising you can settle your tax debt for pennies on the dollar through the IRS offer in compromise program. You can contact us today for a free initial consultation and we can walk you through the offer in compromise program at the Internal Revenue Service. The Internal Revenue Service receives about 60,000 offers in compromise each year and accepts about 38% of those filed. Before we tell you everything you need to know please understand that I would not contemplate filing an offer in compromise on your own because of the very specific standards that IRS uses to qualify a taxpayer for an offer in compromise. The average Internal … Continue reading

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The Process Of Settling Your Debt With the IRS + Former Agent Speaks

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    The process of settling Your Tax Debt with the IRS   We are true tax experts for the IRS offer in Compromise. As a former Agent, I worked the offer program for the IRS. We are true experts in the process of settling your tax debt. There are ads all over the television and the Internet is draped with splash ads and companies advertising you can settle your tax debt for pennies on the dollar through the IRS offer in compromise program. You can contact us today for a free initial consultation and we can walk you through the offer in compromise program at the Internal Revenue Service. The Internal Revenue Service receives about 60,000 offers in compromise each year and accepts about 38% of those filed. Most of those offers and compromises that are accepted are filed by professional firms that have on staff tax attorneys, tax lawyers, certified public accountants, enrolled agents or former IRS agents. Before we tell you everything you need to know please understand that I would not contemplate filing an offer in … Continue reading

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The New Offer in Compromise Program by the IRS

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    We are true tax experts for the IRS offer in Compromise. As a former Agent, I worked the offer program for the IRS.   There are ads all over the television and the Internet is draped with splash ads and companies advertising you can settle your tax debt for pennies on the dollar through the IRS offer in compromise program. The fact of the matter that’s true however I would make sure you fill out the IRS qualifier or tool before filing an offer in compromise. Take my word on this I am a former IRS agent in teaching instructor who taught the offer in compromise program while at the Internal Revenue Service. I am a tax expert in the offer in compromise. You can contact us today for a free initial consultation and we can walk you through the offer in compromise program at the Internal Revenue Service. The Internal Revenue Service receives about 60,000 offers in compromise each year and accepts about 38% of those filed. Most of those offers and compromises that are accepted are … Continue reading

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IRS Improving Tax ID Theft + Here is What is New

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    IRS, Security Summit Partners Expand Identity Theft Safeguards for 2017 Filing Season, Build on 2016 Successes The Internal Revenue Service, state tax agencies and industry partners today finalized plans for 2017 to improve identity theft protections for individual and business taxpayers after making significant inroads this year against fraudulent returns. Public and private sector leaders announced today that their collective efforts through the Security Summit initiative have led to a marked improvement in the battle against identity theft during 2016. This is highlighted by the number of new people reporting stolen identities on federal tax returns falling by more than 50 percent, with nearly 275,000 fewer victims compared to a year ago. At a Washington press conference, Summit leaders also detailed new and expanded safeguards for taxpayers in the upcoming 2017 tax season. The 2017 focus revolves around “trusted customer” features that will help ensure the authenticity of the taxpayer and the tax return – before, during and after a tax return is filed. The additional protections will build on the 2016 successes that prevented fraudulent returns and … Continue reading

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