How Long Should I Keep My Tax Records?

We are often asked – “How long should I keep my tax records?”

Many of us aren’t quite sure what to do with all the paper and digital copies of our tax forms that accumulate as time goes by. A 2017 IRS survey says that 88% of taxpayers are so fearful of an audit that they wouldn’t even consider cheating on their taxes. If the majority of us know that we file our taxes accurately each year, then how long do we need to keep the forms?

The IRS states in Publication 17, Chapter 1: “You must keep records that support items shown on your returns until the period of limitations for that return runs out.”

The IRS also states: “Keep records relating to property until the period of limitations expires for the year in which you dispose of the property.” Some examples of property that the IRS is referring to include:

  • Residence
  • Stocks
  • Inherited property that might be sold in a taxable transaction

Listed below are periods of limitations taken from IRS guidance for certain personal tax returns filed:

If
you…

Then
the period is…

1. File a return and
(2), (3), and (4) don’t apply to you

3 years

2. Don’t report
income that you should and it is more than 25% of the gross income shown on
your return

6 years

3. File a fraudulent
return

No limit

4. Don’t file a
return

No limit

5. File a claim for
credit or refund after you filed your return

The later of 3 years
or 2 years after tax was paid

6. File a claim for
a loss from worthless securities or bad debt deduction

7 years

Questions? Contact us today for guidance on keeping your tax records.