Keen records and for how long: Business taxes

TaxMama’s® Tips

Keeping Records –

Which Ones and How Long?

By Eva Rosenberg, EA

© Eva Rosenberg www.TaxMama.com ® 2

State/IRS

IRS Requirements Statutes of Limitations

3 years and 6 years

Long-term ownershipFrom purchase to sale +

State – check with your state http://www.taxadmin.org/fta/forms.ssi


Personal Records

• Tax Returns – forever and a day• W-2s/1099s and data used to produce that

tax return - forever and a day• Cancelled checks and receipts – 7 years• Bank and credit card statements – 7 years• Gifts, loans, wire transfers deposited into your

back accounts (make copies) – 7 years


Business Records

• Tax Returns – forever and a day• W-2s/1099s, sales tax returns, year-end payroll returns, and

data used to produce that tax return - forever and a day • General Ledger (QuickBooks files) (archive them) - forever and

a day – or at least 10 years • Cancelled checks and receipts – 7-10 years

• Note: Copy all checks received from customers• Bank and credit card statements – 7-10 years• Inventory and shipping records – 7-10 years• Net Operating Losses – 7-10 years after using up NOLs


Payroll Records

• W-2s/1099s, year-end payroll returns - forever and a day • For government agencies or former employees

• Payroll journals - 7-10 years• Employee/worker records - 7-10 years

• Signed W-4s & I-9s – with copy of SS card and Drivers License

• Signed W-9s with business cards and other back up• Time cards and other proof of time worked – 7-10 years• Time cards and other proof of time worked - for family

employees– forever and a day • Payroll tax payments – forever and a day


Asset Records

• Property and Equipment purchases, improvements and refinances – until 7 years after the sale of the property

• Exchange property (Sec 1031), trade-ins, etc. – until 10 years after the last property in the series is sold

• Gifts (be sure to pass along the purchase information) – until 7 years after the sale of the property

• Casualty losses and deferrals (Sec 1033) - until 10 years after the last property in the series is sold


Sales - Gain/Loss Records

Keep the following:• Real Estate – Purchases, sales, refinances

• Escrow closing statements (HUD-1) and deed• Loan summary, note and grant deed• Deprecation tables – regular and AMT

• Investments and securities – purchases and sales• Certificates or confirmation of purchase• Split notifications• Capital gains distributions• Dividend reinvestments

• Partnerships, LLCs etc. – purchases and sales• Partnership agreement and Investment docs and proof of your payment• Share received for services – documentation and proof you reported

the income


Fraud, Neglect, Changes

IRS says:• You file a fraudulent return; keep records

indefinitely.• You do not file a return; keep records

indefinitely.• Claim for refund or amended returns – 3

years from original return; 2 years from date of payment; 3 years from filing date of claim

• Claim for a loss from worthless securities or bad debt deduction; keep records for 7 years.


Ways to keep records

Expandable files – or files boxes

The Tax MiniMiser® - the paper way www.homebusinesstaxcuts.com • Remember to photocopy receipts on thermal paper or carbons.

They will fade quicklyIntuit Document Management System for QuickBooks ®

Accounting http://proadvisor.intuit.com/product/accounting-software/qb-dms.jsp

• If you have lots of documents, get a good, fast scanner/copier with a feeder, so you don’t have to stand there all day.

• This could require a part-time assistant• Be sure to store the back-ups in a heat-proof, magnet-proof safe. • Keep the software to read PDF files and relevant media with the

backups.


How to dispose of records

Shred the records.

Period. If there are too many to shred yourself,

call a service to come out and shred them for you.

(Cost for 50 boxes was under $150)


After Disposal

There is a universal law –

Once you totally dispose of something – you will need it urgently.

Life is a fine balance between pack-rat-ism and toss-ism.


Enjoy TaxMama

Visit TaxMama.com ® for more information

Subscribe to TaxQuips for free http://www.taxmama.com/subscribe/

Pick up a copy of The 100% Home-Based Business Tax Solution http://snurl.com/homebiz-tax


Enjoy Intuit

Enjoy QuickBooks’ webinars and resources for your business

http://www.quickbooksgroup.com/

Keen records and for how long: Business taxes

Business

Transcript of Keen records and for how long: Business taxes