Women Today

In the latest issue of Women, writer Judy Kneiszel talks about taxes and avoiding an audit. For our blog readers, she also talks about which documents you should be keeping:

Don’t let sloppy record keeping bring you down.

Unlike being arrested where the burden of proof lies with the courts, if you get audited, the burden of proof lies with you. And Internal Revenue Service (IRS) studies show that poor record keeping causes more people to lose audits than taking too many deductions.

Make it a practice to save any and all documents that may have an impact on your federal tax return including:

-- Tax forms (W-2s, 1099s, etc.) and returns from previous years
-- Credit card and other receipts
-- Bank statements
-- Brokerage statements
-- Mutual fund statements
-- Cancelled checks or other proof of payment
-- Invoices
-- Mileage logs
-- Closing statements and other paperwork from real estate purchases

How long should you hang on to these records? Well, the IRS has three years from the filing date to audit a return if it suspects good faith errors.

The three-year deadline also applies if you discover a mistake and decide to file an amended return to claim a refund.

The IRS has six years to challenge your return if it thinks you underreported your gross income by 25 percent or more. There is no time limit if you failed to file your return or filed a fraudulent return.

The IRS doesn’t care how you save your records, but suggests you do it “in an orderly fashion.”

Judy Kneiszel is a freelance writer from De Pere and owns The Word House LLC with her husband, Jim.