Have you ever wondered how long you should keep financial documents? Well, it’s a common question that CPA’s hear from clients. Considering how common the question is, the accounting team at C.E. Thorn, CPA, PLLC have put together a list of forms and documents that you should keep in case you are audited by the IRS.
The IRS has a rule of 3 years in which they can initiate an audit. This helps reduce the paperwork that individuals and small business owners must keep on file. Most of the documents you can discard are supporting tax documents, because your actual tax returns should be kept on file permanently.
Keep forms that report income wages, interest, dividends, capital gains or losses.
Keep records that show you have health insurance or that show criteria for exemption.
Receipts for Charitable Contributions, Retirement Accounts and other Savings Plans.
Records Showing Taxable Gain or Loss
Even though the IRS usually only audits returns from the last 3 years, it is a good idea to keep records for at least 6 years since there are some circumstances in which they can go back more than 3 years.
As you can see, there are many areas that will need to be accounted for if you are audited by the IRS. It is best to work with a skilled and experienced accounting professional to avoid problems during your audit. Most of the time, working with a local CPA can help prevent an audit in the first place. Contact the Raleigh small business accountants of C.E. Thorn, CPA, PLLC to find out what records you will need to keep and which are ok to purge.