A lot of Georgia residents are confused when it comes time to file their yearly income tax return. Some are able to hire an accountant to help with the process and insure that there are no major mistakes, while others attempt to complete the process themselves, hoping for the best. Even when someone does hire an accountant, there is always a bit of educated guesswork on deductions and sometimes the IRS will disagree with the way a taxpayer decided to do things. 

This is why many of us keep years’ worth of paperwork in our homes and offices, waiting until a time in the future when we are sure that the IRS is no longer interested in our documentation and we will not need it anymore. However, many people don’t really know when that time will come and as a result we end up guessing on that as well. Sometimes the impulsive tossing of a past year’s tax file during a move can create big problems if an unexpected audit notice appears in the mail.

So when is it safe to toss out those old papers? Well the general rule of thumb is the statute of limitations for a regular audit, which is three years. However, if the IRS believes that you have failed to disclose more than 25 percent of your income, then the statute of limitations extends to six years. There are some other rare situations in which a statute may be extended, so it is helpful to consult with a tax law professional to find out if any of those situations could apply to you.

Source: Forbes, "How Far Back Can IRS Claim Tax Evasion or Fraud? Timing is Everything," Robert W. Wood, Oct. 13, 2013.