Records could also be requested by state agencies. Employers should also follow the four-year retention rule for records relating to wage continuation payments made to employees by the employer or third party under an accident or health plan. Such records should include the beginning and ending dates of the period of absence, and the amount and weekly rate of each payment including payments made by third parties.
A different rule applies for records substantiating any information returns and employer statements to employees regarding tip allocations. Under the tax code, these records must be kept for at least three years after the due date of the return or statement to which they relate.
The tax code provides an explicit recordkeeping requirement for employers with enumerated fringe benefit plans, such as health insurance, cafeteria, educational assistance, adoption assistance or dependent care assistance plan. That's how long the IRS has to come back with questions about your bad investment.
The same time frame applies to deductions for a bad debt. There are some instances in which to keep tax records perhaps forever. Say someone — not you, of course — commits tax fraud. There is no statute of limitations on tax fraud audits. When the IRS suspects someone entered illegal information on a return, it can investigate at any time, not just within the standard three-year window.
You also need to keep documentation of why you didn't file a tax return. Yes, that sounds like trying to prove a negative, but if, for example, you took a year off to take care of a sick relative and didn't earn enough income to require that you file, proof of that will short-circuit a detailed IRS examination of your missing tax year. W-2 form s. Alimony received. Alimony paid. Property tax assessments.
Form nondeductible IRA contributions. Transaction data including individual purchase or sale receipts. Even after the statute of limitation passes and you get rid of supporting documentation, keep a copy of each year's tax return that you file.
This includes not just the itself, but also any associated schedules that you sent to the IRS that year. These often are needed when you apply for a loan or other financial assistance, such as money for college.
Deciding how long to keep tax records means deciding where to keep all that paper. The law doesn't require any special record-keeping system for all taxpayers. You can keep your records in any manner that works best for you, as long as it allows you to produce the material if the IRS asks.
For most taxpayers nowadays, that means accessing records in digital form. View our privacy policy , privacy policy California , cookie policy , supported browsers and access your cookie settings. Search within FAQs Search. Share Twitter LinkedIn Facebook. Add a Bookmark Your browser does not allow automatic adding of bookmarks. How long must an employer keep an employee's Form W-4?
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