Beginning now through January 15, Dent Moses has extra shred bins on-site to help our clients dispose of old financial and tax records.   All you need to do is bring your unwanted documents to our office, and we will place them in one of our secure shred bins.   If you have more than you can carry, we have staff available to help you get the documents from your car to the office.  We can also make special arrangements if you have more than will fit in our bins.

So, you are ready to shred your old files – What should you keep?  

Record Retention Schedule

Here’s a link to our record retention schedule, including guidelines for individuals and businesses.

https://dentmoses.com/wp-content/uploads/2022/01/Record-Retention-Schedule-Dent-Moses-LLP-updated.pdf

How Long Does the IRS Have to Assess Additional Tax?

In most cases, the IRS can audit, propose adjustments, and assess additional tax up to 3 years after the later of (a) the date a return was filed or (b) the original due date.  For example, assume your 2023 individual tax return was filed on April 11, 2024, a few days before the due date of April 15, 2024. The IRS has until April 15, 2027, to assess a deficiency under the standard 3-year statute of limitations.  For 2020 individual tax returns filed prior to October 15, 2021, the 3-year statute of limitations expired in 2024.

More About the Statute of Limitations

As always, there are exceptions to the general 3-year statute of limitations described above.  The statute of limitations is extended to six years if gross income is understated by 25% or more.  There is no statute of limitations if a fraudulent return is filed or if no return is filed at all.  In addition, the time period to file an amended return requesting a refund differs from the amount of time the IRS has to assess tax. 

What Should I Keep Indefinitely?

Keep any records related to the purchase of a home—closing statements and documentation for improvements. At some point, you may sell and need to determine the basis—even if you are covered by the $500,000 home sale exclusion. We recommend keeping those at least seven years after reporting the sale. The same recommendation holds for purchases and sales of any real property, investments, and other capital assets.

We recommend keeping a copy of tax returns indefinitely, but after the 6-year statute passes, you can destroy most of the source documents. Also, retain W-2 copies and IRA documentation.  It may be necessary to provide your historic W-2 forms to correct social security earnings records if there is ever a problem in the future.

Don’t hesitate to contact your Dent Moses advisor if you have questions.