Supporting Tax Claims: Accurate records, such as receipts, canceled checks, and other documents, are essential to substantiate items of income, deductions, or credits claimed on tax returns. The IRS mandates retaining these records for as long as they may be material in administering any provision of the Internal Revenue Code, typically until the period of limitations expires for that return.
Due Diligence Requirements: For parents claiming tax benefits like the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), Additional Child Tax Credit (ACTC), Credit for Other Dependents (ODC), American Opportunity Tax Credit (AOTC), or Head of Household (HOH) filing status, meticulous recordkeeping is vital. Tax preparers are required to meet specific due diligence requirements, including maintaining records that support the eligibility for these credits and filing statuses.
Retention Periods: The IRS generally advises keeping records for at least three years from the date you filed your original return or two years from the date you paid the tax, whichever is later. However, certain situations may require longer retention periods.
By diligently maintaining accurate records, parents can ensure they meet IRS requirements, substantiate their claims, and fully benefit from available tax credits and deductions.