Feeling stressed about old tax returns? The IRS has limitations on how far back they can look. Let’s explore these timeframes and ease your worries!
The statute of limitations clarifies when the IRS can no longer audit your tax return or assess additional taxes. In most cases, the IRS has three years from the later of two dates: your filing deadline (typically April 15) or the actual filing date. Generally, audits happen within 12-18 months of filing.
However, some exceptions extend the audit window to 6 years:
- Significant Omissions: You left out more than 25% of your income or over $5,000 in specific assets.
- Estate & Gift Tax Mishaps: You omitted more than 25% of the reported value on your estate or gift tax returns.
- Excise Tax Errors: You neglected to report over 25% of the excise tax owed.
- Personal Holding Company Tax Issues: You failed to file the required income and ownership details schedule.
Important Exceptions:
- The time limit is lifted if you never filed or filed with fraudulent intent. The IRS can audit you anytime in these cases.
Understanding these rules can dispel the cloud of uncertainty around IRS audits. If you’re unsure or just want to learn more about how these statutes of limitations might affect you, schedule a tax assessment through our link below or call us at (408) 708-9330.