What Needs Keeping After My Taxes are Filed?  

With 2021 taxes wrapped and returned, you likely have paperwork ready to discard, a refund underway, or still need to file an amended return. 

Some important tips in all three situations:

Yes, you can throw away some tax records now.

The document retention rule: hang onto tax records related to your return as long as the IRS can audit your return or assess additional taxes.  The statute of limitations for an audit is generally three years after you file your return. Anything connected to a return filed prior to 2018 can now go. That also means if you filed an extension for your 2018 return, hang on to your records at least three years from when you filed the extended return. 

Important note: the statute of limitations extends to six years for taxpayers who understate their gross income by more than 25%.

You should keep certain tax-related records longer. For example, keep the actual tax returns indefinitely so you can prove to the IRS that you filed a return. There’s no statute of limitations for an audit if you didn’t file a return or filed a fraudulent one.

Keep records associated with a retirement account until you’ve depleted the account and reported the last withdrawal on your tax return, plus three (or six) years. And retain records related to real estate or investments for as long as you own the asset, plus at least three years after you sell it and report the sale on your tax return. Keep these records for six years if you want to be extra safe.

You can check the status of your refund with just a click.

The IRS has an online tool that can tell you the status of your refund. Go to https://www.irs.gov/refunds and click “Get Your Refund Status” to find out about yours. You’ll need your Social Security number, filing status, and the exact refund amount.

If you forgot to report something, file an amended return.

In general, you can file an amended tax return and claim a refund within three years after the date you filed your original return or within two years of the date you paid the tax, whichever is later. So, for a 2021 tax return you filed on April 15, 2022, you can generally file an amended return until April 15, 2025.

However, there are a few opportunities when you have longer to file an amended return. For example, the statute of limitations for bad debts is longer than the usual three-year time limit for most items on your tax return. In general, you can amend your tax return to claim a bad debt for seven years from the due date of the tax return for the year that the debt became worthless.

We’re here when you need us!

Questions on taxes are a year-round scenario. That’s why we’re here. If you have any questions about tax record retention, locating a refund, or filing an amended return, reach out to us anytime. 

Ward Hieronymus