Tax Musings of a Burbank CPA: So How Long Do I Have to Keep This Stuff, Anyway?

So here is this time honored question – how long do I have to keep all my old income tax receipts? What’s the answer?  It may be a little more complicated than that. The IRS statute of limitations (the time limit the IRS has to audit your taxes for any particular year) is three years from the date of filing.  Your state may have different rules (for instance, California’s statute of  limitations is four years from the date of filing.)  Taking your state into account, and especially if you have filed an extension in the past (which can add up to six months onto the statute of limitations), so five years should be good, right?  But the IRS can go back six years if you are subject to the 25% understatement of tax or don’t report more than $5,000 in foreign income, so now seven years is probably the safe answer.  But there is more information you may need to keep longer than the seven year time frame. If you own a house (residence, rental or investment property), you need to keep documentation of all the improvements you made to the property, since you may have to show the auditors your [...]

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Tax Musings of a Burbank CPA: What is Tax Freedom Day and Why is it Celebrated?

You may not have known that last Sunday,  April 24 was Tax Freedom Day.  And what is Tax Freedom Day and why is it different almost every year? Tax Freedom Day is the day that  Americans have paid all their Federal, State, County, City and Business taxes and are finally earning money for themselves.  See this article in Tax Foundation for more information on this important non-holiday holiday: http://taxfoundation.org/article/tax-freedom-day-2016-april-24 Tax Freedom Day gives us an idea of how much we actually work each year just to pay taxes.  Maybe that will get enough people to try and keep taxes low so we have more money for ourselves instead of using it to pay for government.  For financial,  accounting and tax musings, You can count on us to count for you! Email: bstonercpa@sbcglobal.net  Phone: 818-317-6035   Website: www.briantstonercpa.com AWARDED BEST ACCOUNTANT IN BURBANK, CA BY BEST BUSINESSES 2014 AND 2015!!   Android and the IPhone:    Has been Featured On   https://twitter.com/bstonercpa

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Tax Musings of a Burbank CPA: What Does It Really Mean When The IRS Calls You.

I have heard this from clients, associates, even my wife – “The IRS called us today saying we owe taxes – what do we do?” Here is the scoop direct from the IRS. The IRS will never call or email you requesting money or threatening to send the sheriff if you don’t pay.  They don’t ask for debit cards or other forms of untraceable payments to pay the ‘tax bill.’  The IRS sends you a certified letter if they feel you owe something and give you a chance to appeal the finding before even sending a bill. The only time I know of that they do phone you is to return a call, usually regarding setting an examination date for you.  They only email if you are on one of their email information subscription lists.  This also goes for the Franchise Tax Board in California, other state tax agencies and utility companies.  They will not call or email you; they will send you a bill with a chance to dispute it, not threaten to have you arrested.  These scams have been going on for two years, now.  Just remember if the IRS calls, just hang up the phone.    For [...]

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