Resources

 

Roth & Associates wants to ensure you have the resources you need to keep current on various legal requirements when it comes to taxes for yourself or your business. Can’t find your answer here? Our professionals can help you, just give us a call!

Record Retention Guide

How Long To Keep Tax Records

You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means you must keep records that support items shown on your return until the period of limitations for that return runs out.

The period of limitations is the period of time in which you can amend your return to claim a credit or refund or the IRS can assess additional tax. Table 3 contains the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period beginning after the return was filed. Returns filed before the due date are treated as being filed on the due date.

Table 3. Period of Limitations

IF you… THEN the period is…
1 Owe additional tax and (2), (3), and (4) do not apply to you 3 years
2 Do not report income that you should and it is more than 25% of the gross income shown on your return 6 years
3 File a fraudulent return No limit
4 Do not file a return No limit
5 File a claim for credit or refund after you filed your return The later of 3 years or 2 years after tax was paid.
6 File a claim for a loss from worthless securities 7 years

Property: Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. You must keep these records to figure your basis for computing gain or loss when you sell or otherwise dispose of the property.

Generally, if you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up. You must keep the records on the old property, as well as the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition.

Keeping records for nontax purposes: When your records are no longer needed for tax purposes, do not discard them until you check to see if they should be kept longer for other purposes. Your insurance company or creditors may require you to keep certain records longer than the IRS does.

Why Keep Records?

There are many reasons to keep records. In addition to tax purposes, you may need to keep records for insurance purposes or for getting a loan. Good records will help you:

  • Identify sources of income. You may receive money or property from a variety of sources. Your records can identify the sources of your income. You need this information to separate business from nonbusiness income and taxable from nontaxable income.
  • Keep track of expenses. You may forget an expense unless you record it when it occurs. You can use your records to identify expenses for which you can claim a deduction. This will help you determine if you can itemize deductions on your tax return.
  • Keep track of the basis of property. You need to keep records that show the basis of your property. This includes the original cost or other basis of the property and any improvements you made.
  • Prepare tax returns. You need records to prepare your tax return. Good records help you to file quickly and accurately.
  • Support items reported on tax returns. You must keep records in case the IRS has a question about an item on your return. If the IRS examines your tax return, you may be asked to explain the items reported. Good records will help you explain any item and arrive at the correct tax with a minimum of effort. If you do not have records, you may have to spend time getting statements and receipts from various sources. If you cannot produce the correct documents, you may have to pay additional tax and be subject to penalties.

Kinds of Records To Keep

Basic records

Basic records are documents that everybody should keep. These are the records that prove your income and expenses. If you own a home or investments, your basic records should contain documents related to those items. Table 1 lists documents you should keep as basic records. Following Table 1 are examples of information you can get from these records.

Table 1. Proof of Income and Expense

FOR items concerning your… KEEP as basic records…
Income
  • Form(s) W-2
  • Form(s) 1099
  • Bank statements
  • Brokerage statements
  • Form(s) K-1
Expenses
  • Sales slips
  • Invoices
  • Receipts
  • Canceled checks or other proof of payment
  • Written communications from qualified charities
Home
  • Closing statements
  • Purchase and sales invoices
  • Proof of payment
  • Insurance records
  • Receipts for improvement costs
Investments
  • Brokerage statements
  • Mutual fund statements
  • Form(s) 1099
  • Form(s) 2439

Income

Your basic records prove the amounts you report as income on your tax return. Your income may include wages, dividends, interest, and partnership or S corporation distributions. Your records also can prove that certain amounts are not taxable, such as tax-exempt interest.

Note: If you receive a Form W-2, keep Copy C until you begin receiving social security benefits. This will help protect your benefits in case there is a question about your work record or earnings in a particular year. Review the information shown on your annual (for workers over age 25) Social Security Statement.

Expenses

Your basic records prove the expenses for which you claim a deduction (or credit) on your tax return. Your deductions may include alimony, charitable contributions, mortgage interest, and real estate taxes. You also may have child care expenses for which you can claim a credit.

Home

Your basic records should enable you to determine the basis or adjusted basis of your home. You need this information to determine if you have a gain or loss when you sell your home or to figure depreciation if you use part of your home for business purposes or for rent. Your records should show the purchase price, settlement or closing costs, and the cost of any improvements. They also may show any casualty losses deducted and insurance reimbursements for casualty losses. Your records also should include a copy of Form 2119, Sale of Your Home, if you sold your previous home before May 7, 1997, and postponed tax on the gain from that sale.

When you sell your home, your records should show the sales price and any selling expenses, such as commissions.

Investments

Your basic records should enable you to determine your basis in an investment and whether you have a gain or loss when you sell it. Investments include stocks, bonds, and mutual funds. Your records should show the purchase price, sales price, and commissions. They may also show any reinvested dividends, stock splits and dividends, load charges, and original issue discount (OID).

Proof of Payment

One of your basic records is proof of payment. You should keep these records to support certain amounts shown on your tax return. Proof of payment alone is not proof that the item claimed on your return is allowable. You also should keep other documents that will help prove that the item is allowable.

Generally, you prove payment with a cash receipt, financial account statement, credit card statement, canceled check, or substitute check. If you make payments in cash, you should get a dated and signed receipt showing the amount and the reason for the payment.

If you make payments by electronic funds transfer, you may be able to prove payment with an account statement.

Table 2. Proof of Payment

IF payment is by… THEN the statement must show the…
Cash
  • Amount
  • Payee’s name
  • Transaction date
Check
  • Check number
  • Amount
  • Payee’s name
  • Date the check amount was posted to the account by the financial institution
Debit or credit card
  • Amount charged
  • Payee’s name
  • Transaction date
Electronic funds transfer
  • Amount transferred
  • Payee’s name
  • Date the transfer was posted to the account by the financial institution
Payroll deduction
  • Amount
  • Payee code
  • Transaction date

Account statements: You may be able to prove payment with a legible financial account statement prepared by your bank or other financial institution. These statements are accepted as proof of payment if they show the items reflected in Table 2.

Pay statements: You may have deductible expenses withheld from your paycheck, such as union dues or medical insurance premiums. You should keep your year-end or final pay statements as proof of payment of these expenses.

Specific Records

This section is an alphabetical list of some items that require specific records in addition to your basic records.

Alimony

If you receive or pay alimony, you should keep a copy of your written separation agreement or the divorce, separate maintenance, or support decree. If you pay alimony, you also will need to know your former spouse’s social security number.

Business Use of Your Home

You may be able to deduct certain expenses connected with the business use of your home. You should keep records that show the part of your home that you use for business and the expenses related to that use.

Casualty and Theft Losses

To deduct a casualty or theft loss, you must be able to prove that you had a casualty or theft. Your records also must be able to support the amount you claim.

For a casualty loss, your records should show:

  • The type of casualty (car accident, fire, storm, etc.) and when it occurred,
  • That the loss was a direct result of the casualty, and
  • That you were the owner of the property.

For a theft loss, your records should show:

  • When you discovered your property was missing,
  • That your property was stolen, and
  • That you were the owner of the property.

Child Care Credit

You must give the name, address, and taxpayer identification number for all persons or organizations that provide care for your child or dependent. You can use Form W-10, Dependent Care Provider’s Identification and Certification, or various other sources to get the information from the care provider. Keep this information with your tax records.

Contributions

You must keep records to prove the contributions you make during the year. The kinds of records depend on whether the contribution is cash, noncash, or out-of-pocket expenses. For information on contributions and the records you must keep, see Publication 526, Charitable Contributions.

Credit for the Elderly or the Disabled

If you are under age 65, you must have your physician complete a statement certifying that you were permanently and totally disabled on the date you retired.

You do not have to file this statement with your Form 1040 or Form 1040A, but you must keep it for your records.

If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician’s statement you are required to keep.

Education Expenses

If you have the records to prove your expenses, you may be entitled to claim certain tax benefits for your education expenses. You may qualify to exclude from income items such as a qualified scholarship, interest on U.S. savings bonds, or reimbursement from your employer. You also may qualify for certain credits or deductions. You should keep documents, such as transcripts or course descriptions, that show periods of enrollment and canceled checks and receipts that verify amounts you spent on tuition, books, and other educational expenses.

Exemptions

If you are claiming an exemption for your spouse or a dependent (a qualifying child or a qualifying relative), you must keep records that support the deduction.

Employee Business Expenses

If you have employee business expenses, see Publication 463, Travel, Entertainment, Gift, and Car Expenses, for a discussion of what records to keep.

Energy Incentives

If you want to claim one of the tax incentives for the purchase of energy-efficient products, you must keep records to prove:

  • When and how you acquired the property,
  • The purchase price of the property, and
  • That the property qualified for the credit.

The following documents may show this information.

  • Purchase and sales invoices.
  • Manufacturer’s certification statement.
  • Canceled checks.

Gambling Winnings and Losses

You must keep an accurate diary of your winnings and losses that includes the:

  • Date and type of gambling activity,
  • Name and address or location of the gambling establishment,
  • Names of other persons present with you at the gambling establishment, and
  • Amount you won or lost.

Health Savings Account (HSA) and Medical Savings Account (MSA)

For each qualified medical expense you pay with a distribution from your HSA or MSA, you must keep a record of the name and address of each person you paid and the amount and date of the payment.

Individual Retirement Arrangements (IRAs)

Keep copies of the following forms and records until all distributions are made from your IRA(s).

Form 5498, IRA Contribution Information, or similar statement received for each year showing contributions you made, distributions you received, and the value of your IRA(s).

Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., received for each year you received a distribution.

Form 8606, Nondeductible IRAs, for each year you made a nondeductible contribution to your IRA or received distributions from an IRA if you ever made nondeductible contributions.

For a worksheet you can use to keep a record of yearly contributions and distributions, see Publication 590, Individual Retirement Arrangements (IRAs).

Medical and Dental Expenses

In addition to records you keep of regular medical expenses, you should keep records of transportation expenses that are primarily for and essential to medical care. You can record these expenses in a diary. You should record gas and oil expenses directly related to that transportation. If you do not want to keep records of your actual expenses, you can keep a log of the miles you drive your car for medical purposes and use the standard mileage rate. You should also keep records of any parking fees, tolls, taxi fares, and bus fares.

For information on medical expenses and the standard mileage rate, see Publication 502, Medical and Dental Expenses (Including the Health Coverage Tax Credit).

Mortgage Interest

If you paid mortgage interest of $600 or more, you should receive Form 1098, Mortgage Interest Statement. Keep this form and your mortgage statement and loan information in your records. For information on mortgage interest, see Publication 936, Home Mortgage Interest Deduction.

Moving Expenses

You may be able to deduct qualified moving expenses that are not reimbursed. For more information on what expenses qualify and what records you need, see Publication 521, Moving Expenses.

Pensions and Annuities

Use the worksheet in your tax return instructions to figure the taxable part of your pension or annuity. Keep a copy of the completed worksheet until you fully recover your contributions. For information on pensions and annuities, see Publication 575, Pension and Annuity Income, or Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits.

Taxes

Form(s) W-2 and Form(s) 1099-R show state income tax withheld from your wages and pensions. You should keep a copy of these forms to prove the amount of state withholding. If you made estimated state income tax payments, you need to keep a copy of the form or your check(s).

You also need to keep copies of your state income tax returns. If you received a refund of state income taxes, the state may send you Form 1099-G, Certain Government Payments.

Keep mortgage statements, tax assessments, or other documents as records of the real estate and personal property taxes you paid.

If you deducted actual state and local general sales taxes instead of using the optional state sales tax tables, you must keep your actual receipts showing general sales taxes paid.

Tips

You must keep a daily record to accurately report your tips on your return. You can use Form 4070A, Employee’s Daily Record of Tips, which is found in Publication 1244, Employee’s Daily Record of Tips and Report to Employer, to record your tips.

Tax Rates

Single

If Taxable Income Is: The Tax Is:
$0 to $9,325 10% of taxable income
$9,325 to $37,950 $932.50 + 15% of the amount over $9,325
$37,950 to $91,900 $5,226.25 + 25% of the amount over $37,950
$91,900 to $191,650 $18,713.75 + 28% of the amount over $91,900
$191,650 to $416,700 $46,643.75 + 33% of the amount over $191,650
$416,700 to $418,400 $120,910.25 + 35% of the amount over $416,700
Over $418,400 $121,505.25 + 39.6% of the amount over $418,400

Head of Household

If Taxable Income Is: The Tax Is:
$0 to $13,350 10% of taxable income
$13,350 to $50,800 $1,335 + 15% of the amount over $13,350
$50,800 to $131,200 $6,952.50 + 25% of the amount over $50,800
$131,200 to $212,500 $27,052.50 + 28% of the amount over $131,200
$212,500 to $416,700 $49,816.50 + 33% of the amount over $212,500
$416,700 to $444,550 $117,202.50 + 35% of the amount over $416,700
Over $444,550 $126,950 + 39.6% of the amount over $444,550

Married Filing Jointly

If Taxable Income Is: The Tax Is:
$0 to $18,650 10% of taxable income
$18,650 to $75,900 $1,865 + 15% of the amount over $18,650
$75,900 to $153,100 $10,452.50 + 25% of the amount over $75,900
$153,100 to $233,350 $29,752.50 + 28% of the amount over $153,100
$233,350 to $416,700 $52,222.50 + 33% of the amount over $233,350
$416,700 to $470,700 $112,728 + 35% of the amount over $416,700
Over $470,700 $131,628 + 39.6% of the amount over $470,700

Married Filing Separately

If Taxable Income Is: The Tax Is:
$0 to $9,325 10% of taxable income
$9,325 to $37,950 $932.50 + 15% of the amount over $9,325
$37,950 to $76,550 $5,226.25 + 25% of the amount over $37,950
$76,550 to $116,675 $14,876.25 + 28% of the amount over $76,550
$116,675 to $208,350 $26,111.25 + 33% of the amount over $116,675
$208,350 to $235,350 $56,364 + 35% of the amount over $208,350
Over $235,350 $65,814 + 39.6% of the amount over $235,350

 

Standard Mileage Rate

Use Rate
Business 53.5 cents
Medical Care or Move 17 cents
Charitable 14 cents

2016 Tax Rates

Single

If Taxable Income Is: The Tax Is:
$0 to $9,275 10% of taxable income
$9,275 to $37,650 $927.50 + 15% of the amount over $9,275
$37,650 to $91,150 $5,183.75 + 25% of the amount over $37,650
$91,150 to $190,150 $18,558.75 + 28% of the amount over $91,150
$190,150 to $413,350 $46,278.75 + 33% of the amount over $190,150
$413,350 to $415,050 $119,934.75 + 35% of the amount over $413,350
Over $415,050 $120,529.75 + 39.6% of the amount over $415,050

Head of Household

If Taxable Income Is: The Tax Is:
$0 to $13,250 10% of taxable income
$13,250 to $50,400 $1,325 + 15% of the amount over $13,250
$50,400 to $130,150 $6,897.50 + 25% of the amount over $50,400
$130,150 to $210,800 $26,835 + 28% of the amount over $130,150
$210,800 to $413,350 $49,417 + 33% of the amount over $210,800
$413,350 to $441,000 $116,258.50 + 35% of the amount over $413,350
Over $441,000 $125,936 + 39.6% of the amount over $441,000

Married Filing Jointly

If Taxable Income Is: The Tax Is:
$0 to $18,550 10% of taxable income
$18,550 to $75,300 $1,855 + 15% of the amount over $18,550
$75,300 to $151,900 $10,367.50 + 25% of the amount over $75,300
$151,900 to $231,450 $29,517.50 + 28% of the amount over $151,900
$231,450 to $413,350 $51,791.50 + 33% of the amount over $231,450
$413,350 to $466,950 $111,818.50 + 35% of the amount over $413,350
Over $466,950 $130,578.50 + 39.6% of the amount over $466,950

Married Filing Separately

If Taxable Income Is: The Tax Is:
$0 to $9,275 10% of taxable income
$9,275 to $37,650 $927.50 + 15% of the amount over $9,275
$37,650 to $75,950 $5,183.75 + 25% of the amount over $37,650
$75,950 to $115,725 $14,758.75 + 28% of the amount over $75,950
$115,725 to $206,675 $25,895.75 + 33% of the amount over $115,725
$206,675 to $233,475 $55,909.25 + 35% of the amount over $206,675
Over $233,475 $65,289.25 + 39.6% of the amount over $233,475

 

Standard Mileage Rate

Use Rate
Business 54 cents
Medical Care or Move 19 cents
Charitable 14 cents
Tax Due Dates

January 2018

  • Tuesday, January 16 Pay the final installment of your 2017 estimated tax – use Form 1040-ES.
  • Tuesday, January 16 Farmers and fishermen: Pay your estimated tax for 2017. Use Form 1040-ES.
  • Wednesday, January 31 Individuals: File your tax return if you did not pay your last installment of estimated tax by Jan 16th (see Form 1040-ES)
  • Wednesday, January 31 Furnish Forms 1098, 1099 and W-2G to recipients for certain payments during 2017. Furnish Form W-2 to employees who worked for you during 2017.
  • Wednesday, January 31 File 2017 Forms W-2, W-2AS, W-2CM, W-2GU, W-2VI, W-3 and W-3SS with the SSA whether you file using paper forms or electronically.
  • Wednesday, January 31 File Form 1099-MISC with IRS if you are reporting nonemployee compensation.
  • Wednesday, January 31 File Form W-3 with Copy A of all Forms W-2 issued for 2017.
  • Wednesday, January 31 File Forms 940, 941, 943, 944 and/or 945 if you did not deposit all taxes when due.
  • Wednesday, January 31 Applicable Large Employers provide Forms 1095-C to full time employees; For all other providers of Minimum Essential Coverage, provide Forms 1095-B to responsible individuals.

February

  • Monday, February 12 File Forms 940, 941, 943, 944 and/or 945 if you timely deposited all required payments.
  • Thursday, February 15 Furnish Forms 1099-B, 1099-S and certain Forms 1099-MISC to recipients.
  • Thursday, February 15 File a new Form W-4 if you claimed exemption from income tax withholding in 2017.
  • Friday, February 16 Begin withholding on employees who claimed exemption from withholding in 2017 but did not file a W-4 to continue withholding exemption in 2018.
  • Wednesday, February 28 File Forms 1096, 1098, 1099 (except Form 1099-MISC reporting non-employee compensation), and W-2G if you file paper forms.
  • Wednesday, February 28 File paper Forms 1094-C and 1095-C with IRS if you are an Applicable Large Employer; For all other providers file paper Forms 1094-B and 1095-B with the IRS

March

  • Thursday, March 1 Farmers and fishermen: File Form 1040 and pay any tax due. However, you have until Apr 17 to file if you paid your 2017 estimated tax payments by Jan 16.
  • Thursday, March 15 S Corps: File Form 1120S for calendar year & pay any tax due. Furnish copy of Sch. K-1 to each shareholder. For automatic 6-month extension, file Form 7004 & deposit estimated tax. File Form 2553 to elect S Corp status beginning with calendar year 2018.
  • Thursday, March 15 Electing Large Partnerships: File Form 1065-B calendar year return. Furnish Sch. K-1 to each partner. For automatic 6-month extension File Form 7004.
  • Thursday, March 15 Partnerships: File Form 1065 and furnish a copy of Sch. K-1 to each partner. For automatic 6-month extension, file Form 7004.

April

  • Monday, April 2 Electronically file Forms W-2, W-2G, 1098, 1099, 8027, 1094-C, 1095-C, 1094-B, and 1095-B. (see F.I.R.E.)
  • Tuesday, April 17 Corporations: Deposit the first installment of your 2018 estimated tax.
  • Tuesday, April 17 Household Employers: File Sch. H with Form 1040 if you paid $2,000 or more to a household employee.
  • Tuesday, April 17 Corporations: File Form 1120 for calendar year and pay any tax due. For automatic 6-month extension, file Form 7004 and deposit estimated tax.
  • Tuesday, April 17 Individuals: File Form 1040, 1040A, or 1040EZ. For automatic 6-month extension file Form 4868 and deposit estimated tax. Pay the first installment of 2018 estimated tax – Use Form 1040-ES.
  • Monday, April 30 Employers: File Form 941 for the first quarter.
  • Monday, April 30 Deposit FUTA tax owed through Mar if more than $500.

May

  • Thursday, May 10 File Form 941 for the first quarter if you timely deposited all required payments.

June

  • Friday, June 15 Individuals living outside the U.S.: File Form 1040. For automatic 4 month extension file Form 4868 and deposit estimated tax.
  • Friday, June 15 Pay the second installment of 2018 estimated tax -Use Form 1040-ES.
  • Friday, June 15 Corporations: Deposit the second installment of your 2018 estimated tax.

July

  • Tuesday, July 31 Deposit FUTA owed through June if more than $500.
  • Tuesday, July 31 File Form 941 for the second quarter.

August

  • Friday, August 10 File Form 941 for the second quarter if you timely deposited all required payments.

September

  • Monday, September 17 Corporations: File calendar year Form 1120S if you timely requested a 6-month extension.
  • Monday, September 17 Partnerships: File calendar year Form 1065 if you timely requested a 6-month extension.
  • Monday, September 17 Individuals: Pay the third installment of your 2018 estimated tax – Use Form 1040-ES.
  • Monday, September 17 Corporations: Deposit the third installment of your 2018 estimated tax.
  • Monday, September 17 Electing Large Partnerships: File Form 1065-B if you timely requested a 6-month extension.

October

  • Monday, October 15 Individuals: File Form 1040, 1040A, or 1040EZ if you timely requested a 6-month extension.
  • Monday, October 15 Corporations: File calendar year Form 1120 if you timely requested a 6-month extension.
  • Wednesday, October 31 File Form 941 for the third quarter.
  • Wednesday, October 31 Deposit FUTA owed through Sep if more than $500.

November

  • Tuesday, November 13 File Form 941 for the third quarter if you timely deposited all required payments.

December

  • Monday, December 17 Corporations: Deposit the fourth installment of your 2018 estimated tax.
IRS Withholding Calculator

If you are an employee, the Withholding Calculator can help you determine whether you need to give your employer a new Form W-4, Employee’s Withholding Allowance Certificate to avoid having too much or too little Federal income tax withheld from your pay.

Who Can Benefit From The Withholding Calculator?

  • Employees who would like to change their withholding to reduce their tax refund or their balance due;
  • Employees whose situations are only approximated by the worksheets on the paper W-4 (e.g., anyone with concurrent jobs, or couples in which both are employed; those entitled to file as Head of Household; and those with several children eligible for the Child Tax Credit);
  • Employees with non-wage income in excess of their adjustments and deductions, who would prefer to have tax on that income withheld from their paychecks rather than make periodic separate payments through the estimated tax procedures.

Tips For Using This Program

  • Have your most recent pay stubs handy.
  • Have your most recent income tax return handy.
  • Estimate values if necessary, remembering that the results can only be as accurate as the input you provide.

Continue to the Withholding Calculator

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