News / 2011

Retaining Tax Information and Records

July 25, 2011 Posted by Tasha Helms
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Retaining and storing your income tax information and records is an important final step of your tax filing responsibility. This article contains information on the rules for keeping your tax records.

When determining how long to keep most of your income tax information and records, look at (a) the time frame over which the IRS can audit a return and assess a tax deficiency or (b) the time frame during which you can file an amended return. For most taxpayers, this period is three years from the original due date of the return, or the date the return is filed, if later. For example, if you filed your 2008 Form 1040 on or before April 15, 2009, the IRS has until April 15, 2012, to audit the return and assess a deficiency. However, if a return includes a substantial understatement of income, which is defined as omitting income exceeding 25% of the gross amount reported on the return, the statute of limitations period is extended to six years.

A good rule of thumb for keeping tax records is to add a year to the IRS statute of limitations period. Using this approach, you should keep your income tax records for a minimum of four years, but it may be more prudent to retain them for seven years, which is what the IRS informally recommends. State tax rules must also be considered, but holding records long enough for IRS purposes will normally suffice for state tax purposes, assuming the federal and state returns were filed at the same time.

Certain tax records, however, should be kept much longer than described above and some, indefinitely. Records substantiating the cost basis of property that could eventually be sold, such as investment property and business fixed assets, should be retained based on the record retention period for the year in which the property is sold. Tax returns, IRS and state audit reports, business ledgers, and financial statements are examples of the types of records you normally should retain indefinitely.

Keep in mind that there may be nontax reasons to keep certain tax records beyond the time needed for tax purposes. This might include documents such as insurance policies, leases, real estate closing statements, employment records, and other legal documents. Your attorney can provide additional guidance.

We hope this brief overview helps you under-stand the income tax record retention rules. If you have any questions regarding your specific situation or if you would like to discuss these rules in more detail, please give us a call.


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How Do I Handle Business Personal Property Listings?

July 25, 2011 Posted by Tasha Helms
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Business Personal Property Listings are filed with the North Carolina County in which your business personal property is located and is due on or before January 31st and includes property on hand at January 1st.

What is Business Personal Property?

Business Personal Property includes machinery, equipment, computers, furniture, fixtures, farm machinery, supplies, airplanes, construction in progress, etc that is used in connection with a business or rental activity and is located in North Carolina.

Are you required to list your business personal property?

If you own or possess personal property used in connection with a business or rental activity you must file a Business Personal Property Listing with the county in which the property is used.

Should you need assistance with your listing or if you are unsure if you are required to list, please give us a call. We will be happy to help.

Useful links and downloads:

Brunswick County Business Personal Property Division website

 

Tax_Information_for_Businesses_In_Brunswick_County

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