If you paid a tax professional to prepare your returns, the preparer will keep copies of his/her work done on your behalf. However, it is your responsibility to provide these records, should the Internal Revenue Service have questions or select your return for audit. How long you should maintain these records depends on several factors.

3. In general, the statute of limitations for most civil tax issues is three years. However, it is important to understand when the three-year time
period begins. For those filing on or before the April due date for personal income tax returns, the three-year window begins with the April date – even if you file earlier. For those who file after the April date, the three-year period starts with the filing date. Thus, statute of limitations for a 2011 return filed on August 10, 2012, would not expire until August 10,
2015. The three-year rule also applies to late returns. The window for a 2002 return filed in 2012 extends to 2015. In addition, amendments to previously filed returns also start a new three-year period.

It is also important to maintain supporting documentation in addition to tax returns. This includes other “official” tax documents, such as W-2s and 1099s, as well as “bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any
other records to support deductions or credits you claim on your return,” according to Forbes columnist Kelly Erb in an April 18, 2012, article.

The three-year time frame applies to most civil tax issues on a return; i.e., the accuracy of the calculations, whether deductions are allowable, etc. However…

6. If the tax issue involved greater than 25% of the gross income on the return, the statute of limitations rises to six years. Since income is
the basis for assessment, failure to report taxable income is arguably the most important item on a return, hence the longer statute of limitations. The six-year rule applies only to unreported income, according to Mark Matthews, a former top IRS official quoted in an April 14, 2012, Wall Street Journal article.

4. If you have employees, keep your employment tax records for at least four years after the date that payroll taxes become due or are paid. Records typically include forms W-2 and W-4, as well as related pay information and benefit forms. This rule applies to household employees as
well.

7+. If you claim depreciation, amortization, or carryover deductions, you’ll want to keep related records for as long as you own the underlying property or until the deductions have expired.

For property-related transactions this includes deeds, titles and cost basis records. If you claim special deductions and credits, you may need to keep your records a little longer than normal. (For example, if you file a claim for a loss from worthless securities or bad debt deduction, you should keep those records for 7 years.)

?. In cases of tax fraud, there is no statute of limitations. A conviction for fraud means the taxpayer deliberately misrepresented information on
the return for the purpose of avoiding or minimizing taxes.

But the legal standards for proving fraud are tough. Says tax attorney Bryan Skarlatos, in the WSJ article, “With tax fraud, the government bears the burden of coming up with clear and convincing evidence the taxpayer had willful intent.”

Records may be stored electronically, but these documents must be as accurate as paper records; it must be possible to index, store, preserve, retrieve, and reproduce the records, in hard copy form if needed.

Note: Even if some records aren’t needed for taxes, it may still may necessary to keep them for other reasons. Be sure to check with your mortgage company and tax professional before disposing of important records.

If your tax record-keeping needs some tidying up, consider asking one of your financial professionals for assistance. They may have services, including electronic document storage, to help keep your house in order.

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