Retention of Tax Records

[Fkatz]

Here is a topice that comes up quite often, and this would pertain to everyone. This is something that I have been asked quite a bit over the last 7 years Since I opened my Tax Practice.
The question is "HOW LONG DO I HAVE TO SAVE MY TAX RECORDS?".

As all of us know the IRS has tyically three years to audit a return. But it has 6 years if it suspects that the return understates income by more than 25%. and there is no statute of limitations applies if FRAUD is involved or the personal fails to file a return.

To Help determine which records to toss and which to keep at the end of tax season I am passing this retention list to all. This is based on Legal as well as Tax considerations.

Here is the listing:

The following papers should be KEEP FOREVER

Copies of Tax Returns
Tax/Legal Correspondence
Audit Reports
Contracts and Leases
Real Estate Records
Corporate Minutes & Records

Items that should be Keep for 6 YEARS

Bank Statements
General Ledgers and Journals
Sales Records and Journals
Personal Investment Records after the sale of>
IRA Records After withdrawal of>

The following items should be Keep for 3 YEARS

Employee Payroll Records (Pay Check Stubs)
Employee Expense Records (Company Drivers or persons working for a company and are not reimbursed for there expenses)
Cancelled Checks
Paid Vendor Invoices
Depreciation Schedules (Tax Life of asset plus 3 years )

Explaination of last item;

When you bought the Truck which is depreciated over 3 years with a 4 year life, after that truck is fully depreciated you must keep the record of that depreciaton for 3 additional years.

If anyone has any questions, Please contact me at

Frank's Tax & Business Services
226 S. Cherokee St
Kings Mountain, NC 28086
(704) 739-4039
or E-mail me through this web site, or Directly at [Fkatz1@aol.com]

[rode2rouen]

What about log books? If using the allowable daily PerDiem instead of actual on road expenses?


Rex

[Fkatz]

rode2rouen




Member since Oct-14-04
355 posts
8 feedbacks
16 points 1. "RE: Retention of Tax Records"
Sep-22-06, 10:20 AM (EDT)
In response to message #0

What about log books? If using the allowable daily PerDiem instead of actual on road expenses?

Rex

Straight Truck O/O
OOIDA# 708441

When the going gets weird, the weird turn pro!


Hi Rex.

I forgot about log books, Sorry,

3 years

Here's my OOIDA #
640573

Frank

[TeamCaffee]

Thanks Frank for that list! It is a great reminder at this time of the year on what to retain and what to throw away.

[Fkatz]

What about log books? If using the allowable daily PerDiem instead of actual on road expenses?

Rex

Straight Truck O/O
OOIDA# 708441

Rex,

You do not use the per diem instead, it is used in conjunction with all of your expenses. so it is a separate deduction but only 75% can be used of the total. if you use Sch C it goes on the Entertainment line #24 and must be shown in the overflow sheet or note page and attached to the return

and the Satellite Tv, DVD's VCR's, and any other entertainment must be listed in Other expenses and you can only use 50% of the total for a deduction

Frank