- Copies of old tax returns are often beneficial when filing amended returns and when making calculations as they relate to current year returns. For example, if you complete your current year return and determine that you owe money but you received a refund on your prior year's return, then you can review your return copies to determine why your tax is higher this year than last year. In addition, if you are audited, it is helpful to have the return for which you are being audited on hand so that you can address the discrepancy. You can request copies of your return by completing IRS Form 4506, but it could take up to 60 days to receive the copies in the mail.
- It is a good idea to maintain copies of your income taxes for at least as long as the IRS statutes allow to assess additional income tax. Generally, the IRS has three years from the date the return was filed to assess additional tax. Taxpayers should also keep in mind that they only have three years from the due date of the original return to file it and receive a refund. Once a tax assessment is made, the IRS has 10 years to collect the tax owed.
- In addition to the considerations you make which directly relate to remaining in compliance with tax law, there are other considerations which would require you to maintain copies of your income tax return. For example, if you file for bankruptcy, you may be required to show copies of your previous year's return to your trustee.
- There are some situations where it may be in your best interest to maintain copies of your returns long after the three-year and 10-year statutes have expired. There is no statute of limitations for taxpayers who file fraudulent returns, and the statue is extended to six years for taxpayers who under report their income by 25 percent or more.
- Taxpayers should maintain copies of any receipts or business records which substantiate listings on their return. If the IRS decides to audit you, then you'll need to validate your losses and deductions.
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