Ultimate Guide For Utahns To Keep Documents For Taxes

At this time of year, you may have wondered how long you should hold onto your tax returns, statements, and those endless supporting documents. The IRS has a maze of retention periods that range from three years to indefinitely. It's like a game of hide and seek with your tax records. However, keeping these documents can be crucial. If the IRS decides to audit you or you need to tweak a return, you’ll want all your ducks—or should I say documents—in a row. According to this ultimate guide skimping on record-keeping can lead to hefty tax bills and, worse, penalties.

The Lowdown on Federal Tax Records

Utah Tax advisors are clear: keep copies of your finished tax returns for at least seven years after they’re due or filed, whichever comes later. Think of them as your personal security blanket. If you can keep them forever, that is even safer like your security blanket designed with a lockable combination.

Supporting Documents Galore

What about all those supporting documents? In Utah, it’s a good idea to keep anything that supports items on your individual tax return until the three-year statute of limitations runs out. This means canceled checks, receipts for alimony payments, records of charitable contributions, mortgage interest payments, and retirement plan contributions. You never know when you might need to file an amended return—maybe you missed a deduction or overlooked a credit.

The IRS Audit Boogeyman

Now, just because three years have passed doesn’t mean you’re entirely safe from an IRS audit. There are exceptions. If the IRS suspects that you’ve understated your income by 25% or more, the audit period stretches to six years. If fraud is involved or you didn’t file a return at all, well, the IRS can come knocking anytime.

Multiple-Year Records

Some records affect multiple years. For example, keep anything related to carryovers of charitable deductions or casualty losses until those deductions no longer have any effect, plus an extra seven years. And if you have bad debts or worthless securities, you’ve got up to seven years to claim deductions for those, so don’t toss those records out prematurely!

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Navigating the world of tax record-keeping can feel daunting but just tap into your personal hoarder and I know you can do it.