Keep tax records at least 3 years, and up to 7 years if you claimed a loss or bad debt deduction.
IRS rules
- 3 years from the filing date or the due date, whichever is later: the general period.
- 6 years if you underreported income by over 25 percent.
- 7 years if you claimed a bad debt deduction or worthless securities loss.
- Indefinitely if you didn’t file or filed a fraudulent return.
- 4 years for employment tax records.
Property records
Keep records of home or investments until 3 years after you sell.
Practical advice
Many advisors suggest keeping returns indefinitely in digital form.
What to keep
W-2s, 1099s, receipts for deductions and prior-year returns.
Dispose
Shred paper records safely.
IRS rules in detail
The IRS says to keep records for as long as they may be needed to apply to the administration of any tax law. In practice, the IRS has these time limits:
- 3 years from the date you filed or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund, or in the usual case where no other rule applies. This is the standard period for an audit.
- 6 years if you did not report income that you should have, and it is more than 25% of the gross income shown on your return.
- 7 years if you claim a loss from worthless securities or a bad debt deduction.
- Indefinitely if you do not file a return or if you file a fraudulent return, since there is no time limit for the IRS to assess tax.
- 4 years for employment tax records after the tax is due or paid.
Property records
Keep records of property, such as a home, stocks, or a business, until the period of limitations expires for the year you dispose of the property. These records show your cost basis, improvements and depreciation, so you can calculate gain or loss. For a home, keep purchase documents and records of improvements for as long as you own it plus at least 3 years after selling.
Practical advice
Many tax professionals suggest keeping tax returns permanently, since they are small and helpful for mortgage applications, loans and proving income. Keep supporting documents for at least 7 years as a safe general rule.
What to keep
- Copies of filed returns and any amended returns.
- W-2s, 1099s, bank and brokerage statements.
- Receipts for deductions, such as charitable donations, medical costs and business expenses.
- Records of retirement contributions, such as IRA records and Form 8606 (keep these until all funds are withdrawn).
- Records of Social Security earnings, which the SSA keeps, but check yearly.
- Property closing statements and improvement receipts.
- Records related to dependents, education credits and student loan interest.
State tax rules
State statutes of limitations differ, commonly 3 to 4 years, and some are longer. Check your state tax agency.
Dispose safely
Shred paper records containing Social Security numbers, bank accounts and other personal details. Digital copies should be stored in encrypted storage or a secured cloud account with backups. The IRS accepts electronic records if they are legible and accurate.
Special cases and state rules
The IRS says keep records for 3 years from filing for most returns, 6 years if you omitted more than 25 percent of gross income, and 7 years for claims of loss from worthless securities or bad debt. If you did not file, or filed a fraudulent return, there is no limit. Keep records about property (home purchase, improvements, investments) until at least 3 years after you sell. Employment tax records should be kept for 4 years. Some states have longer statutes of limitation, such as California at 4 years. Digital copies are accepted by the IRS if they are accurate. Shred paper records with identity details when disposing.
Based on data from the IRS
