Most Georgia residents know that they need to keep copies of certain tax records, but they may not know which ones they need to hold on to or for how long they should retain them. Generally, people should keep copies of all of the documents that they used to arrive at the numbers they put on their tax returns. This may include their W2s, 1098s, 1099s and certificates of creditable coverage under the Affordable Care Act, along with other relevant documents.
Most people need to hold on to their documents for three years. That is the statute of limitations for the IRS to challenge most tax returns. However, there are other statutes of limitations that may come into play about which people should be aware. If there are allegations of tax fraud, there is no statute of limitations. If a person has underreported income on a return, the IRS has up to six years after the date it was due or was filed, whichever comes later.
Holding onto documents showing investments and returns that are used to prepare tax returns is also smart. These can be helpful not only in the event the IRS audits a taxpayer, but it may also be helpful to the investor in tracking the performance of investments over time.
People who have tax disputes with the IRS may want to get help from an attorney who has experience with these types of matters. There are a variety of challenges that can be made to an IRS assessment, and in some cases it may also be possible to reach a settlement.