MLM Script and MLM Software

How long must I save my direct sales paperwork?

I have been in a direct sales business for the past 5 years. I have every reciept and invoice from every customer since then, plus all the reciepts and tax write-off information. It is starting to really stack up in my home. How long must I keep all this paperwork. I keep it only in case of an audit.

Public Comments

1. 3 years is an old rule of thumb for a lot of people, but as the IRS gets more backed every year, the new reccommendation is 5 years. Hope this helps
2. At the absolute least for 3 years from the filing deadline for the tax year in question. 7 years is recommended. Other tax records may have a much longer retention time. Home ownership records: Until 3 years after you sell the home. Stocks, investments & other assets: 3 years after the sale of the last assets. Gift Tax returns & supporting documentation: Your lifetime, plus the lifetime of any recipients of gifts where a gift tax was paid on a gift of property, plus 3 years.
3. technically about 7yrs ... but remember "if" the IRS finds one thing out of place they can go as far back as they like... meaning you better have your paperwork in order.. why not go to walmart and get a $40 file cabinet just for this paperwork.. and then you can write it off as a business expense next year as well.. its better to be safe then sorry
4. Self-Employment income is a heavy audit area. If the IRS claims you underreported your income (either by omitting income or by inflating expenses), they've got 6 years to audit you from the date your filed or the due date whichever is later. (To not worry about the exact due date, use 7 years.) If all you had was a W-2 and minimal deductions/credits, 4 years (3 years rounded up) would be fine.