Tax-related Records: How Long Should You Keep Them?

Tax filing requires having certain records on hand to refer to when documenting your income and other tax-related variables. But after you’ve filed your taxes, it’s not uncommon to wonder just how long you need to keep these documents.

The answer to this question depends on the action, expense, or event which the document records. Generally, you need to keep the records that document any form of income, deduction, or credit reflected on the return you filed, until the period of limitations expires.

What is the period of limitations? The period of limitations refers to the period of time in which you can make changes to your tax return to take advantage of a credit or refund, or the window in which the IRS can assess additional tax.

To get a sense of where you stand in terms of how long you should retain your records, review the official IRS information below as a quick reference guide to the periods of limitation that pertain to income tax returns. Keep in mind that the years refer to the period after you file your return. If you filed your return before the due date, regard them as though they were filed on the due date.

IRS Period of limitations:

1. Unless specified otherwise below, in most cases, documents should be held for a period of 3 years from the date which you filed your tax return or 2 years (whichever is later) from the date which you paid the tax when filing a claim for credit or refund after a return is filed.

2. If you file a claim for a loss from worthless securities or bad debt deduction, records should be held for 7 years.

3. If you determine that you did not originally report income that should have been reported, and it is more than 25% of the return’s gross income, you should maintain your records for 6 years.

4. If a return is not filed, records should be kept indefinitly.

5. If a return has been filed fraudulent in your name, records should be kept indefinitly.

6. Finally, employment tax records should be kept for at least 4 years after the tax is due or paid (whichever is later).

You should also retain property records until the period of limitations ends for the year in which you sell or dispose of the property. It’s important to keep these records to account later for any depreciation, amortization, or depletion deduction and as a basis for determining a tax-related loss or gain that occurs through the sale or disposal of the property.

Even if the period of limitations has passed in which you would need to retain your records, take care not to discard them unless you’re sure you won’t need them for other reasons. For example, the IRS may require you to retain certain records for less time than your financial institution or insurance company does.

It is particularly important to retain copies of your filed tax returns. Not only do they function as “central repositories” for all your tax-related information from prior filing years — in other words, they document all your other supporting documents — but you may need them to refer to the next time you file your taxes.

When you file your taxes with E-file.com, the system automatically saves your tax return for easy access for the following tax season. When you come back the following tax season, there’s no need to hunt for the prior year’s tax return. You simply log into your account, and last year’s return is instantly available to use as reference for your current return.

At E-file.com, you’ll find a simplified filing process that allows even taxpayers who have never before filed their own taxes to do so quickly and easily, and because we offer free, unlimited, on-demand, professional tax assistance, filers are never left without the support they might need should a question or concern arise.