Secondly, keep any investment statements or retirement records. Your tax bill is calculated based upon a number of factors, and without the entire history of these records, the IRS could argue that the entire value of some investments can be treated as income gain. In terms of any portfolio, you are always better safe than sorry when it comes to the IRS.

Third, keep partnership documents – marriage or union licenses, etc – contracts, and other legal documents. This includes property records, deeds and titles, and wills or end of life planning documents.

How should we keep these records, and for how long?

You should really archive all of these documents electronically, ideally on a cloud-based service like Dropbox. This way you will have access to all of them in the event that an emergency like a fire destroys your hard copies.

In terms of how long to keep records, save all of your tax returns and documents for at least 7 years. This is important. It may seem like a long time, but keeping your tax returns and the supporting documents in order for this long is important. The IRS can audit your return for up to three years from your filing date. However, the three-year limit only applies to good-faith errors. If they suspect any problems were intentional, they can go back 6 years or more, so 7 years is a safe time period.

What else should people know?

Just remember that all of this documentation is for a reason! Tax court is one of the few places where failure to report proof of claims results in an assumption of guilt. So, whenever the IRS challenges you, the burden of producing evidence that your claims are true rests on you, so you better have your documentation in order!

Only 70 days until April 15, so make sure you take the time to get organized!

Getting Ready for April 15  was originally published on

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