Tax Questions: Statute of Limitations and 529 Contributions

[DoeyHawk]

Is there a statute of limitations for audits of personal tax returns? If so, how long?

Where do I enter 529 contributions (IA)? I'm using Turbo Tax and cannot find a place to enter the number.

TIA.

[Judge Kemp]

Are you contributing to the College Savings Iowa Plan? That is the 529 for Iowa, and that is how it is listed on the form (Turbo Tax lists it this was as does TaxCut). If you're taking advantage of a 529 from another state (many folks use out of state 529 options), you won't be able to deduct it in Iowa.

[Gushawk]

Statutes of limitations are different for fraud vs. unintentional underpayment, I believe.

[DoeyHawk]

Any mistake is unintentional. My tax preparer is probably not qualified to handle my return.

Still can't find spot for entering 2009 529 contributions.

[RiotFan]

Are you in the state module of TT? It was there when I used it.

[Mr. Hawk]

Any mistake is unintentional. My tax preparer is probably not qualified to handle my return.

Still can't find spot for entering 2009 529 contributions.
You realize that there won't be a place on the federal return, right? It's only deductible on (some) state returns.

[DoeyHawk]

Yes.

[RiotFan]

Line 24 of the IA 1040 form. I believe it was entered under "Iowa Other Adjustments" in TT.

[DoeyHawk]

Line 24 of the IA 1040 form. I believe it was entered under "Iowa Other Adjustments" in TT.

You're correct. It was lumped in with 20 other things.

I'd like to pay somebody to do my taxes, but I guarantee it wouldn't be accurate. There are so many things the average tax guy wouldn't think about asking.

[PipeDaddy]

Statute of limitations on an audit is 3 years I believe. But if they audit you in any given year they can go back 7 years can't they?

[Kerky]

Turbo Tax sucks. That was your 1st mistake.

[JasperDeKimmel]

Statute of limitations on an audit is 3 years I believe. But if they audit you in any given year they can go back 7 years can't they?

There is much confusion over the statute of limitations when it comes to federal tax and the IRS. The law, however, is actually quite simple in this corner of the tax code.

For most situations, there is a 3 year SOL to collect or levy taxes. The 3 year SOL runs from the date of filing.

If, however, the taxpayer omits 25% or more of the amount of gross income claimed on the return, the SOL is 6 years.

This is where the public confusion enters, I think. Because the IRS can look back to taxes I have filed since February 28, 2007 it is likely they can check:

1. My 2006 return
2. My 2007 return
3. My 2008 return
4. They will be able to check my 2009 return when I file.

4 years of taxes, but the SOL is actually 3 years.

Now, for the scenario where more than 25% is not reported, they can check my returns since February 28, 2004. This includes:

1. 2003
2. 2004
3. 2005
4. 2006
5. 2007
6. 2008
7. 2009 - when filed

7 years of tax returns, but again, the SOL is limited to 6 years. This is where the ubiquitious belief in 7 years of audits comes from.

The SOL is really not 7 years of returns UNLESS the issue is an underreporting of gross income in excess of 25%.

Also, false, fraudulent, or unfiled returns are not covered under any SOL and may taxes may be levied and collected in such cases at any time.

[PipeDaddy]

So assuming I am not ins the 25% not reported category, after this April 15th how many years of taxes and papers do I need to save? Can I chuck everything before my 2006 taxes (which were filed in 2007)?

[Debit One]

My tax preparer is probably not qualified to handle my return.

There are probably 20 guys on the Iowa FB team better at doing taxes than your tax preparer.

;)

[JasperDeKimmel]

So assuming I am not ins the 25% not reported category, after this April 15th how many years of taxes and papers do I need to save? Can I chuck everything before my 2006 taxes (which were filed in 2007)?

That's correct. You will want to hang on to all tax returns filed 3 years previous to the current date, so long as you are confident that the 25% item is an impossibility.

Assuming you filed all of your taxes on or before April 15 in every year, this April 15 you will want to hold on to whatever you filed after April 15, 2007. Likely, this will include only your 2007, 2008, and 2009 tax returns.