JK Harris Recommends Saving Your Tax Records

The nations largest and most successful tax resolution firm, JK Harris and Company, says that disposing of personal records and tax information could cause major headaches down the road.

North Charleston, SC (PRWEB) November 21, 2004 -- Before you throw out your old tax returns and important personal records, JK Harris suggests you think twice before doing so.

The nations largest and most successful tax resolution firm, JK Harris and Company (www.jkharris.com), and the National Association of Enrolled Agents agree that disposing of personal records and tax information could cause major headaches down the road.

The IRS has three years from the date you filed your return to assess any additional taxes you owe. If you failed to report 25% (or more) of your taxable gross income, the IRS has six years from the filing date to assess additional taxes, according to the NAEA. If you did not file a return at all, or filed a fraudulent return, there is no statute of limitations preventing the assessment of additional taxes.

I cant stress enough how important it is to save tax return information," said Charlie Jones, JK Harris Executive Vice President for Operations and a member of the NAEA. If you cant prove to the IRS your income and you dont have copies of your tax returns or income statements, youre in big trouble."

Jones, a retired 33-year veteran of the IRS, said that many customers come to JK Harris needing services such as an Offer in Compromise or tax preparation and have lost proof of income or tax returns. It creates an almost impossible situation," Jones said. We can sometimes get information from our customers former or current employer or from a 1099 in order to help create a viable tax return. At the very least, its an unpleasant situation."

Following are some general rules from the National Association of Enrolled Agents and JK Harris for determining how long to maintain your important personal tax records:

(1) Federal and state income tax returns should be kept indefinitely, along with proof of mailing.
(2) Supporting documents such as W-2s, 1099s, cancelled checks, receipts, credit card statements, and all other documents that verify income and deductions should be kept for a minimum of seven years.
(3) Concerning residential property, you should keep all settlement records for home purchases and any records relating to improvements that were made for as long as you own your home. If you sell your home, you should maintain these records for seven years after the year of sale.
(4) For investment property such as stocks, bonds, mutual funds, etc., you must maintain records showing the purchase date and purchase price for each individual investment for as long as you own the investment. Upon selling the investment, these records will be used to determine whether you have a gain or a loss and whether it is short or long term. Maintain both the purchase and sale records for seven years following the year of sale.
(5) Records for nondeductible IRA contributions need to be maintained indefinitely. They will be needed to determine the non-taxable portion of your required IRA distributions.
(6) For all rental real estate or business property, you should maintain records showing the purchase date, cost of the property, the date and cost of any improvements to the property, and a depreciation schedule showing the method used and the depreciation taken for all the years that you owned the property. These records must also be kept until seven years after the sale of the property.
(7) Personal records such as birth certificates, marriage licenses, divorce agreements, wills, copies of estate and gift tax returns, etc., should be maintained in a permanent file. These are important documents that may be needed to verify information on a tax return but are also needed in various life situations.

For more information, you can logon onto the NAEAs website at www.naea.org. For help with tax resolution and representation as well as tax preparation issues, go to www.jkharris.com for more information.

JK Harris & Company, LLC (www.jkharris.com), based in North Charleston, S.C., is the nations largest tax resolution company with over 470 satellite offices in 45 states and has serviced over 120,000 clients since its founding in 1997 by John Harris. JK Harris also provides services for consumer and commercial debt, student loan debt, investment fraud, financial planning, mortgage services, tax return preparation, and assisting individuals who require support for an IRS audit.

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