Wednesday, April 27, 2011

Record retention

Q.  How long do I need to keep copies of my taxes? JG, Virginia

A.  This is one of the most common questions I receive. Usually, 3 years is sufficient, however, I suggest 4 years as the majority of my clients file CA tax returns, and the statute of limitations in CA is 4 years. Be certain to check with the various states you may need to file in.

You will also need to keep records of asset purchases which will be reportable upon disposition such as your personal residence, all real property, and securities. The IRS has an excellent Publication 552 which is easy to understand. Also, be aware if you have a business and have employees, payroll records need to be kept for 7 years.