How to Survive an Audit

One of the biggest questions that I get is "how long do I need to retain my documents for tax purposes?"

Well, for any normal circumstances really only 7 years
(if you plan on committing tax fraud, keep them forever- the IRS can go back and look at ALL of your tax filings, forever, if you commit fraud!)

Now, what should you keep?

- Anything relating to real estate (Keep these FOREVER as well - you never know what the IRS is going to try to pull when it comes to these larger dollar amounts)

- Receipts for anything you are trying to deduct.  The IRS accepts bank statements, original bank statements, (with the creases from the mail and everything, not the printed out ones that you can manipulate from the computer), about 80% of the time to back up a deduction.  The receipt with WHO, WHAT, WHERE, WHEN & WHY is the only 100% acceptable method of proof for most agents

- Daily planner, or meeting book, or a print out from your PDA of your meetings, the same 5W's as above apply!  This helps you with your mileage backup!

These are just a few of things things necessary to help you survive an audit!  If you are in an audit already, make sure you CALL FOR HELP to your CPA (Shauna can be reached at 602-357-3275 or at shauna@swcbe.com

Comments

[Shailesh Ghimire]

Great tip Shauna.

Is there any scanning device or software you can recommend for storing these documents electronically? If we're going to save it forever, might as well minimize the space.