How long should you keep your tax records? The IRS website has a page that claims to answer this question, but how accurate is this information? Are there things the IRS forgets to mention? Is there advice the IRS gives that could lead to disaster? Watch this video to the end to find out the things that perhaps the IRS doesn't want you to know about. So, what are the general rules for most people? They can get rid of their tax records after three years. Why? In most cases, the IRS is really only allowed to audit the last three years. For instance, right now it's 2018. In 2018, 99% of the examinations the IRS commences are for tax years 2015 to 2017. But many of you might have heard about the rule that says you need to retain your records for at least seven years. So where did that rule come from? The answer is that the IRS has a few exceptions to its 3-year look-back period. If you understate your income by more than 25%, the IRS can go back an additional three years for a total of six years. But that's sort of an interesting paradox. How does the IRS know you understated your income by 25%? What does an auditor have to conduct an examination to know that you did that? And this is why we see so few audits that get opened for six years. The IRS needs to have credible information to say you understated your income by 25% or more through some verifiable source before the audit begins. What's the most common way that happens? Taxpayers and their representatives get a little sloppy. They don't organize their files correctly when under audit and just dump too much data on an auditor's desk,...
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Video instructions and help with filling out and completing Fill Form 8865 Exceptions
