It's a good idea not to throw away certain tax records in case you're audited in the future. Such records include anything related to your tax return, like W-2s (w-twos), 1099 (ten ninety-nine) forms, receipts, and canceled checks for deducted items, as well as all other relevant materials. Save any documents relating to the sale of real estate, stock, or other investments for three years after the selling date. Keep these documents, along with a copy of your tax return, for at least three years, the time period the Internal Revenue Service, or IRS (I-R-S), has to audit and dispute your tax return, in most cases. Special cases are granted an extension of this statute of limitations, specifically if the IRS suspects that you underreported your income by 25 percent or more. If a return is considered false or fraudulent by the IRS, there's no time restriction on when the IRS can audit, so many people choose to keep their tax records indefinitely. It's a good idea to keep certain property records indefinitely as well, in order to report the amount gained or lost when the property is sold. To learn more about keeping tax records, contact a tax professional.
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