Sunday, February 1, 2015

Internal Revenue Service Say’s to Hold On to Your Tax Return’s Paperwork

The Conservative Read writes:  Question. How long should I keep old tax paperwork? 

A. The Internal Revenue Service suggests keeping tax records for at least three years after the filing date. That’s the time period the IRS typically has to examine filed paperwork or perform an audit on taxpayers, and also the time allowed for you to file an amended return should you discover errors on a past return. 
If you own a business, it’s advisable to keep supporting documents for tax returns for six years. Keep the actual tax returns indefinitely because you’ll need them if you apply for new loans or disability insurance.
 In other tax-related news, lawmakers in December extended a number of popular tax breaks that people can take on their 2014 returns. Among them:
  • If you are 701/2 or older, you could have donated up to $100,000 directly from your IRA to a charity in 2014 without paying income tax on the distribution.
  • Taxpayers can choose to deduct either state and local sales taxes or state and local income taxes — a boon to those living in states without an income tax.
  • Up to $4,000 in college tuition and fees from 2014 can be deducted for those within certain income limits.
  • Filers can deduct up to $2 million of mortgage debt forgiven by a lender on a principal residence in 2014. Forgiven debt is generally taxed as income.
  • Tax preparers encourage early filing, particularly if you are expecting a refund, to help reduce your risk for identity theft.
    Your tax return can only be filed once a year, Steber says: “The earlier you file, you lock out all that information from some fraudster using it. It stops any ID theft cold.”
    So how long will it take to collect your tax refund? IRS officials say most electronic refunds will be processed and issued within three weeks. Paper returns that typically take up to six weeks could now take seven weeks due to budget cuts and reduced staffing.
    For more information on the Affordable Care Act and taxes, visit or the IRS website.


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