Tax Law
 
 
Tax Law

How long do tax laws require that I keep tax records?

Generally, three years from filing the return. For example, after April 15, 2005 it is possible to remove documentation for 2001 (if filed April 15, 2002) and all prior years. If someone "understates" his or her income by more than 25% of actual income, then tax laws increase the statute of limitations on an audit to 6 years vs. 3 years. Tax laws equate this to fraud. However, it is always important to keep records pertaining to home ownership, until the home is actually sold; i.e. contract of purchase, cost of improvements and renovation, sales contract and expenses of sale.
(Courtesy of Association of the Bar of the City of New York)


What are my chances of being audited?

The chances of being audited depend on the type of income and expenses shown according to the appropriate tax laws. There are certain "red flags" that IRS uses such as very high medical or charitable deductions, casualty losses and low self employment income with high expenses. This is especially true is a loss has been shown for more than 3 years.
(Courtesy of Association of the Bar of the City of New York)


Should I file jointly with my spouse or singly?

This depends on each spouse's items of income and expenses and how these are affected by tax laws. Usually, it pays to file separately if one spouse has high medical for example, but low income. This is because medical expenses must exceed 7 1/2% of adjusted gross income to be deductible. Also if one spouse is concerned about the other's questionable deductions or unreported income, then separate returns would be in order. As a general rule, tax laws are structured that joint returns will save money because the joint return rate is lower than the rate of those married but filing separately.
(Courtesy of Association of the Bar of the City of New York)


 
 

iLawyer.com respects your privacy | About Us | Contact Us | Customer Service | Terms | Sitemap
42 West 44th Street New York, NY 10036 | Telephone: (212) 626-7373

© 1999-2013 iLawyer, Inc. All Rights Reserved.