Month: May 2025

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Helpful Articles Paris, TN Tax

Still Have Tax Questions? You’re Not Alone 

By Elizabeth Russell Owen, CPA | Private Client Tax Services Practice Leader  

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Executive Summary 

Even after filing a federal income tax return, many individuals still face important follow-up items. From tracking refunds, organizing records, and responding to IRS correspondence, this article outlines five post-filing priorities to help you stay organized, informed, and prepared. Our team remains available year-round to support you beyond tax season. 

Key Highlights 

  • Track Your Refund: Use the IRS “Where’s My Refund?” tool with your Social Security number, filing status, and exact refund amount. 
  • Record Retention: Keep supporting tax documents for at least six years; some should be stored indefinitely. Use cloud storage to back up essential files. 
  • Amendment Window: Did you miss any deductions or credits? File Form 1040-X within three years of filing or two years of payment to receive a refund. 

Even after submitting your federal return, there are often a few loose ends to tie up. Below are some of the top things our clients ask about and what to do next. 

  1. Wondering when your refund will arrive?

Use the IRS’s “Where’s My Refund?” tool at IRS.gov to track the status. Have the following ready: 

  • Your Social Security number 
  • Filing status 
  • Exact refund amount 

Once submitted, the tracker will show whether your refund has been received, approved, or issued. 

  1. How long should you hold on to tax records?

At a minimum, keep records associated with your tax return for as long as the IRS has the authority to audit or assess additional taxes. In most cases, this period is known as the statute of limitations, which is three years from the date you filed your return. That means you can typically remove most supporting documentation related to 2021 and earlier years, unless you filed late or with an extension (if you filed an extended 2021 return, wait at least three years from the filing date before removing records). 

However, that time frame can extend to six years if more than 25% of your gross income was omitted from a return. In rare cases, such as failing to file a return or filing a fraudulent one, the IRS has no time limit to act. Hence, keeping supporting tax return documents for at least six years is recommended.  

Certain records should be kept longer: 

  • Keep all filed tax returns indefinitely to confirm your filing history. 
  • Upload older records to secure cloud storage before discarding physical files, ensuring you maintain access if needed later. This approach helps reduce clutter while preserving key documents in case of a future inquiry. 
  • Other types of documents should be kept longer or permanently in some cases. Examples include but are not limited to business and payroll documentation, estate and trust records, and property basis support. Consult with an ATA professional for details. 
  1. Think you missed a deduction or credit?

You may still be eligible for a refund by filing an amended return (Form 1040-X). In most cases, you have: 

  • Three years from the original filing date, or 
  • Two years from the date you paid the tax — whichever is later 

In limited situations, additional time may be available, such as up to seven years to claim a bad debt deduction. 

While the IRS has time limits for assessment of additional taxes, if income was omitted or understated, the IRS will usually accept an amended return past the three-year window if the amendment results in a balance due. It is best to file the amended return as soon as the discrepancy is discovered to minimize interest and penalties.  

  1. Received a notice from the IRS?

If the IRS needs additional information or adjusts your return, you’ll be contacted by mail only. Be aware: the IRS will never call, text, or email you to discuss your return. If you receive a letter from the IRS, reach out to us, and we’ll help you review the notice and respond appropriately.

  1. Moved recently? Don’t forget to update your address.

To avoid missing important IRS correspondence, complete Form 8822 to officially report a change of address. 

We’re Here for You Year-Round 

Tax questions don’t stop after April 15 and neither do we. Whether you’re facing a notice, amending a return, or preparing for next year, our team is here to help every step of the way. 

Need More Help? Contact your ATA tax advisor today. 

Categories
Helpful Articles Memphis, TN Tax

What Income Tax Documents Should You Keep and What Can You Discard? 

By Mark Puckett, CPA | Tax Principal 

Key Highlights 

  • Keep income tax returns forever as proof of filing. 
  • Hold supporting documents for six years, depending on your situation. 
  • Retain property and investment records until six years after the asset is sold. 
  • In divorce or separation, keep copies of joint returns and custody agreements. 
  • Protect documents using cloud storage or a fireproof safe. 

Once your 2024 tax return is filed, it may be tempting to clear out your files. But before you reach for the shredder or delete old digital folders, consider this: certain documents can still protect you in the event of an IRS audit or help establish the value of assets you sell in the future. 

Keep Your Tax Returns — Indefinitely 

Your filed tax returns serve as the cornerstone of your financial records. These should always be kept permanently. While most supporting documents (like receipts or canceled checks) only need to be retained temporarily, the return itself is essential for confirming what was filed and when. 

Supporting Documentation — Hold for at Least Six Years 

In general, the IRS has three years from the due date of your return (or the actual filing date, if later) to audit you, unless exceptions apply. During this window, you should keep supporting records such as: 

  • W-2s and 1099s 
  • Receipts and invoices 
  • Bank and credit card statements 
  • Charitable donation records 
  • Medical expense documentation 

If you understated income by more than 25%, the IRS has six years to assess taxes. And if you never file a return, there’s no time limit. Keep signed copies of all returns to prove filing. 

Property and Investment Records — Keep Until Six Years After Sale 

Some documents tie to transactions that span decades. For example, if you: 

  • Bought a home in 2009 
  • Made improvements in 2016 
  • Sold the home in 2024 

For this example, you’ll need to retain documentation from 2009 and 2016 to prove your cost basis on your 2024 tax return. This includes: 

  • Purchase documents 
  • Receipts for renovations 
  • Closing statements 

This same rule applies to investment assets, such as stocks or mutual funds, especially if dividends are reinvested over time. Each reinvestment counts as a separate purchase and should be documented. 

Special Circumstances — Divorce or Separation 

If you’re going through a divorce or separation, secure copies of all joint tax returns and related documents. Access to these records may be difficult later, and both spouses remain jointly liable for taxes filed on a joint return. Also retain custody agreements and any documents stating which parent can claim dependents. 

Protect Your Records from Loss 

Fire, theft, and natural disasters can destroy paper records. To keep your information safe: 

  • Use a fireproof safe or bank safe deposit box 
  • Maintain digital backups in encrypted cloud storage 
  • Organize records in a central location for quick evacuation if needed 

We’re Here to Help 

If you’re unsure about what records to keep and for how long, our team can guide you. Thoughtful record keeping today can help you avoid stress, penalties, and lost deductions tomorrow. Contact your ATA representative for guidance.  

 

Categories
Helpful Articles Henderson, KY

The Importance of Employee Theft and Dishonesty Insurance and Extra Expense Coverage

By Malcolm E. “Mac” Neel III, CPA, CFE | Forensic-Litigation Practice Leader 

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Executive Summary 

In today’s fast-paced business environment, internal risks can be as damaging as external threats, yet they are often overlooked. Two essential but often underutilized insurance protections are Employee Theft and Dishonesty Insurance and Extra Expense Coverage. These policies help businesses recover from internal fraud, embezzlement, and associated investigative costs. This article outlines why these coverages matter, what they include, and how they can provide critical financial protection for organizations of all sizes. 

Key Highlights 

  • Internal fraud poses a significant risk, costing organizations an estimated 5% of their annual revenue, according to the Association of Certified Fraud Examiners. 
  • No business is immune — even trusted, long-time employees may act dishonestly under personal or financial pressure. 
  • Coverage is affordable: A $100,000 policy typically costs between $600 and $750 per year. 
  • Extra Expense Coverage pays for legal and investigative costs related to financial misconduct, providing an added layer of protection. 
  • Work with a trusted advisor to determine the appropriate level of coverage for your business. 

Protecting Against Internal Risks Via Employee Theft and Dishonesty Coverage 

Employee Theft and Dishonesty Insurance, also known as fidelity bond or commercial crime insurance, provides crucial protection against financial losses. This coverage safeguards businesses from financial loss due to fraudulent or dishonest acts committed by employees, including theft of money, securities, property, embezzlement, forgery, and fraud. A well-structured insurance policy offers peace of mind and a financial safety net. Again, recent research indicates that $100,000 in coverage typically costs between $600 and $750 per year. The level of coverage your business ideally should have in place is best determined by consultation with your insurance agent or advisor. 

Extra Expense Coverage 

This policy covers investigative and legal costs resulting from internal financial crimes, such as embezzlement or misappropriation of funds. It complements employee theft coverage and is also relatively inexpensive given the level of protection it offers. 

True Story-Sad Story 

Thirty years ago, when I was a young staff accountant performing a review for a client, I noticed a few odd items of documentation provided to us which led to more questions. Secondly, the bookkeeper, in answering our standard inquiries, provided responses which were thoroughly illogical and made absolutely no sense. We made further inquiry of the owner and president of the business, providing him the documents we were given, and he asked us to dig a bit deeper into the matter.  

After gathering additional information, we noticed more inconsistencies and documentation which appeared to have been altered and checks which appeared to be signed by someone forging the owner’s name. In summary, the secretary-bookkeeper had embezzled approximately $190,000. The business had no Employee Theft and Dishonesty Coverage, and the company filed for bankruptcy as it was unable to meet its obligations. Had adequate coverage been in place, the company would have been made whole. 

Schedule a Consultation 

If you’re unsure whether your business is adequately protected against internal risks, our team can help you evaluate your insurance strategy and recommend next steps. Let’s make sure you have the safeguards in place to protect what you’ve built. Schedule a 30-minute complimentary consultation with me by filling out our contact form.