Keep tax returns at least 3 years, and up to 7 years if you claimed a loss or bad debt deduction.
IRS rules
- 3 years from filing or the due date, whichever is later: general period.
- 6 years if you left out more than 25 percent of income.
- 7 years if you claimed a loss from worthless securities or bad debt.
- Indefinitely if you didn’t file or filed a fraudulent return.
Property
Keep home and investment records for 3 years after you sell.
Practical advice
Keep a digital copy of returns permanently.
Employment taxes
Keep records for 4 years.
What else to keep
W-2s, 1099s, receipts and canceled checks that support deductions.
Shred
Securely dispose of paper records.
IRS rules in detail
The IRS generally has 3 years from the date you file to audit a return or to assess more tax. It can extend this to 6 years if you left out more than 25% of your gross income, and has no limit if you did not file or filed a fraudulent return. You have 3 years from the filing date, or 2 years from the date you paid the tax, to claim a refund.
Property
Records for homes, stocks, rental properties and business assets show your basis, improvements and depreciation. Keep them until the limitations period ends for the tax year in which you sell or dispose of the property, usually 3 years after filing that return.
Practical advice
Many advisers recommend keeping returns permanently, since they are small in size, and supporting records for 7 years. Returns help with loan applications, estate settlement and replacing lost records. State rules may differ, with some states looking back 4 years or more.
Employment taxes
Employers must keep employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later. This applies to payroll tax returns, wage records, and Forms W-4 and W-9.
What else to keep
- Pay stubs until you check them against your W-2.
- Bank, credit card and brokerage statements that back up deductions.
- Receipts for charitable donations, with a written acknowledgment for gifts of $250 or more.
- Medical expense records and business mileage logs.
- Forms 1098 for mortgage interest and 1099 for income.
- Records of nondeductible IRA contributions until all funds are withdrawn.
- Records for credits, such as education and energy credits.
Digital records
Scan paper documents and store copies in an encrypted drive or a secure cloud service with backups. The IRS accepts electronically stored records if they are legible and accurately reproduce the original.
Shred
Dispose of records after the retention period using a cross-cut shredder. Remove Social Security numbers, bank account numbers and other personal details to avoid identity theft.
Documents and timing
The IRS suggests keeping tax returns and supporting documents such as W-2s, 1099s, receipts and bank statements for at least 3 years from the filing date or 2 years from the date the tax was paid, whichever is later. Keep documents for 6 years if you underreported income by more than 25 percent. Keep records for 7 years if claiming a loss from worthless securities. Home purchase documents, stock sale records and retirement account basis records should be kept as long as you own the asset plus 3 years. Keep copies of final tax returns indefinitely since they help with loans, benefits and future filings. Use cloud storage with encryption and backups.
Based on data from the IRS
