How long do I have to keep my Tax Returns and Supporting Documents?
The answer to this question is…it depends.
We always recommend that you keep a copy of your actual tax returns indefinitely.
As a general rule of thumb, you really only need to keep the returns and back up documents for the period of time in which you would either want or need to amend a return or the period for which the taxing authority can review (audit) the returns. This is generally a period of 4 years after the due date of the return, depending on your state’s statute of limitations.
We play it safe and tell clients to hold onto all records for a period of 7 years following the filing of the tax return. In terms of any documents pertaining to assets (equipment, vehicles, property, etc.), we recommend holding onto the documentation for the acquisition of the asset for as long as the asset is owned, and then for an additional 7 years once sold or otherwise disposed of. When in doubt, keep the records.
Documents can be stored electronically. We actually scan and digitally store all of our documents, tax returns and other related information, thus eliminating the need for filing cabinets and storage boxes. If this sparks an interest with you, call us.
Does an Extension allow me to pay my tax later?
No! When you file for an extension, it is simply an extension of time to file the tax return. Any taxes payable are still due on the filing deadline and failure to pay the tax may result in penalties and interest.
How many years back can I file and still get a refund?
You can file prior year tax returns and still receive any refunds you are owed, as long as you file within three years of the original due date of the return. File one day later, and the refund is lost.
Of course, if you have not filed for years prior to the three year statute of limitations and would have been due a refund, it is still advisable to file the tax returns so that the IRS does not think that you owe them additional tax for these years.
If you need to catch up on any years that have unfiled returns, call us for help.
What version of QuickBooks should I use?
In general, QuickBooks has 5 main versions of their software – Online, Mac, Pro, Premier and Enterprise. There are also Accountant’s versions, as well as industry specific versions available.
For most small businesses that we deal with, QuickBooks Pro is the least expensive and most functional option. Of course, one of the other options may be a better fit for your particular situation, and we would be happy to discuss the options with you.
One other important piece of information to keep in mind is that QuickBooks comes out with new software every year. If you are planning on using their online features, such as bank and credit card downloads, then you will also have to keep up and update QuickBooks every couple of years in order to use all of the functions. QuickBooks usually stops supporting and allowing certain online functions, currently after 3 years.
Wow, is that the Millennium Falcon in your office? How long did that take you to build?
Yes! It is the LEGO Ultimate Collector’s Millennium Falcon. It is the largest of the LEGO sets ever made. It contains 5195 pieces and took 47 ½ hours of build time….not all at once, of course. It is approximately 33 inches long, 22 inches wide and 8 inches tall. It is one of over 40 Star Wars LEGO sets Vince has built and at one time displayed at our office. Today, we only keep the biggest and best for display.