After how many years does the statute of limitations end for any personal financial stuff? Is it different in Canada and US and rest of the world? TIA
Like all tax and administrative laws, it's different in most countries of the world. At least, different enough to make asking when you can shred your papers, with no location specified in either your post or your profile, somewhat "less than an optimal approach", to put it mildly!
I live in the USA, which means I don't trust our government nor IRS, I have my documents going back to 1975. I been audited twice and I wheel in my shopping cart of documents, they laugh at first but I have everything from every filings and except once when I had dumb tax guy, I have won every battle. Even when I had dumb tax guy, I got good shake from tax people, they saw I wasn't trying to cheat openingly.
I believe it is three years, after three tax years...you're generally safe or ok to throw out documents.
It is up to 3 years on a regular audit, and if they find serious errors they can go up to 6 years back. SO 6 years is the safest option I guess
And there are some sections of the code, like dealing with PFICs, where they can go back as far as they want. So keep everything until you kick the bucket.
This is what the IRS says........and it's not a straight forward answer. How long should I keep records? The length of time you should keep a document depends on the action, expense, or event which the document records. Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out. The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax. The information below reflects the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date. Note: Keep copies of your filed tax returns. They help in preparing future tax returns and making computations if you file an amended return. Period of Limitations that apply to income tax returns Keep records for 3 years if situations (4), (5), and (6) below do not apply to you. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return. Keep records indefinitely if you do not file a return. Keep records indefinitely if you file a fraudulent return. Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later. https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-long-should-I-keep-records ------------- This is a bit easier to read.......... How Long Should I Keep My Tax Records? By Brian O'Connell A: The Internal Revenue Service (IRS) has some hard and fast rules regarding how long taxpayers should keep their tax records. As the IRS puts it, the duration of your tax record keeping depends on the “action, expense, or event” impacting those records. Those actions, and those timelines, are important, as they impact the statute of limitations on any amendments to your tax return, or the federal government’s ability to demand additional tax payments from you. To comply with IRS documentation mandates, keep the following tax records for the following time periods: Document Duration of Record Keeping Federal tax returns At least three years Reason: Uncle Sam only has three years to assess additional tax payments. On the flip side, taxpayers only have three years to make a claim they were entitled to, but did not receive. One exception: You need to keep page 1 of Form 1040, 1040A, 1040NR or 1040-T if you ever made nondeductible contributions to a traditional IRA and filed Form 8606, until all distributions are made. Investment forms At least seven years Reason: The IRS wants taxpayers to hold on to individual retirement account (IRA) documents, home sales paperwork and other key investments for seven years. The agency may need to go back that far to ascertain accurate payment on taxes owed on investment accounts. Bank statements Two years Reason: In general, bank statements and employment paycheck stubs need only be kept for two years. If you have under-reported any federal taxes, keep your tax documents from the past six years, starting with the year the taxes were under-reported. If you have failed to file a form, or filed a fraudulent form, don’t toss tax records away. The IRS has a legal right to review them. The period of limitations is the time in which you can amend your tax return to claim a credit or refund, or the time in which the IRS can assess additional tax. The following information contains the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date. Note: Keep copies of your filed tax returns. They help in preparing future tax returns and making calculations if you file an amended return. 1. You owe additional tax and situations (2), (3), and (4), below, do not apply to you: Keep records for three years. 2. You do not report income that you should report, and it is more than 25% of the gross income shown on your return: Keep records for six years. 3. You file a fraudulent return: Keep records indefinitely. 4. You do not file a return: Keep records indefinitely. 5. You file a claim for credit or refund after you file your return: Keep records for three years from the date you filed your original return or two years from the date you paid the tax, whichever is later. 6. You file a claim for a loss from worthless securities or bad debt deduction: Keep records for seven years. 7. Keep all employment tax records for at least four years after the date that the tax becomes due or is paid, whichever is later. http://www.investopedia.com/ask/answers/020414/how-long-should-i-keep-my-tax-records.asp ------- Why do they suggest that you keep bank records for 2 years and Investment forms for 7 years but Tax Returns for 3 years ? Why don't they just keep one rule for everything and suggest it be kept for 7 years ? The rules for keeping documents is just as convoluted as the tax process.
So they say if you are a liar, you should keep all the incriminating evidence against you forever? Makes sense.