Lea Uradu, J.D. is a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, and Tax Writer.
Fact checked by Fact checked by Michael RosenstonMichael Rosenston is a fact-checker and researcher with expertise in business, finance, and insurance.
The Internal Revenue Service (IRS) has some hard and fast rules regarding how long taxpayers should keep their tax records.
As the IRS puts it, the duration of your tax record keeping depends on the “action, expense, or event” impacting those records. Those actions, and those timelines, are important, as they impact the statute of limitations on any amendments to your tax return, or the federal government’s ability to demand additional tax payments from you.
The period of limitations is the time in which you can amend your tax return to claim a credit or refund, or the time in which the IRS can assess additional tax.
The following information is directly from IRS.gov, which states how long to keep income tax returns. The years specified begin after the return was filed. Any returns filed before the due date are considered to have been filed on the due date.
The following questions should be applied to each record as you decide whether to keep a document or throw it away:
The IRS states holding onto records that relate to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. The reason to store these records is to determine any depreciation, amortization, or depletion deduction, and to determine the gain or loss when you sell or dispose of the property.
Generally, if you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition.
The IRS states that when tax records are no longer required for specific tax purposes, do not dispose of them until there is a certainty they won't be needed for other reasons. Many times, other bodies will require tax documents for their own purposes. Insurance companies or creditors often ask you to keep files longer than the IRS requires. When in doubt, play it safe and keep the records.
If the IRS finds a substantial error in your current return, they could go back six years into your tax history to investigate. However, you might want to keep your returns for even longer than that. Your tax records summarize your financial life. They contain important cost basis data that may be difficult to find several years from now. This is less of a problem today because account custodians are now required to report and transfer cost data with assets. But why rely on the custodian when you have the info? Your return will also validate your income and whether you made retirement plan contributions. Best practices suggest you should hold on to your tax returns and supporting documents for as long as possible. In this era of electronic filing and record keeping, it’s an easy thing to do.
Neal Frankle, CFP®
Wealth Resources Group Westlake Village, CA