According to the IRS, how long to keep a document depends on the action, expense or event recorded by the document. Generally, keep records that support an item of income, deduction or credit shown on the tax return until the period of limitations for that tax return runs out. The IRS has provided the following guidelines:

Period of limitations that apply to income tax returns:

1. Keep records for three years if situations (4), (5), and (6) below do not apply.

2. Keep records for three years from the date of filing the original return or two years from the date the tax was paid, whichever is later, if filing a claim for credit or refund after filing the return.

3. Keep records for seven years if filing a claim for a loss from worthless securities or bad debt deduction.

4. Keep records for six years if income that should been reported was not reported, and it is more than 25 percent of the gross income shown on the return.

5. Keep records indefinitely if not filing a return.

6. Keep records indefinitely if filing a fraudulent return.

7. Keep employment tax records for at least four years after the date that the tax becomes due or is paid, whichever is later.

Many states may have a longer statute. In addition, there is no statute when a return is not filed (same with the IRS).

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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