From the course: Taxes and Accounting for Music

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How long do you need to keep tax records?

How long do you need to keep tax records?

From the course: Taxes and Accounting for Music

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How long do you need to keep tax records?

- Start with the basic rule that the IRS is prohibited from asking you about returns that are more than three years old. That is, three years from the date of your last return. There are exceptions. Your tax returns may be based on financial records that date back more than three years. For example, you may be claiming five year depreciation on your Marshall amp. In cases like that, you should keep records and receipts for as long as the item may be audited. In addition, there are exceptions based on the statute of limitations for various offenses. For example, you can be audited going back six years if you fail to report more than 25% of your gross income. Finally, there may be non-tax reasons to retain financial records or receipts. For example, when dealing with creditors, warranties, or for insurance claims. These rules aside, tax experts advise that if possible, tax returns, W-2s, and 1099s should all be kept indefinitely.

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