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No one likes doing their taxes, but after you’ve submitted your forms and receipts, at least your job is done, right? Not so fast. Just because you’ve completed your return doesn’t mean you’ve fulfilled your tax obligations. You’ll need to keep your tax returns and all accompanying documents for a specific period of time after you file.
To figure out how long to keep tax records, check out the table below to find the statute of limitations for your tax filing situation.
On this page:
- How long to keep tax records
- What tax records do you need to keep?
- Why keeping your tax records is important
- Deciding when to dispose of your tax records
How long to keep tax records
The statute of limitations is the maximum time after you file in which you can amend your income tax return, or the IRS can audit you. The following table covers the different periods recommended for tax filers by the IRS:
|Situation||Keep Tax Records For|
|For those who file their return accurately||3 years|
|For those who file a claim for a credit or refund after your return has been filed||3 years from the date you filed or 2 years from the date you paid the tax, whichever is later|
|For those with employment tax records||4 years|
|For those that do not report income that should have been reported, and it is more than 25% of the gross income on the return||6 years|
|For those that file a claim for a loss from worthless securities or a bad debt deduction||7 years|
|For those that do not file a tax return||Indefinitely|
|For those that file a fraudulent return||Indefinitely|
What tax records do you need to keep?
In the table below, you’ll find a number of common tax documents you should keep on hand during the period highlighted above.
|Category||What to Keep|
|Credit card statements|
|Cancelled checks or proof of payment|
|Purchases and sale documents|
|Form 5498 (IRA contributions)|
|Form 8606 (nondeductible IRA contributions)|
The tax documents listed in the table above are just some common forms and statements. Depending on your situation, there may be additional documents you’ll need to keep.
Why keeping your tax records is important
While it might feel like a pain to have to store your tax returns, it’s actually beneficial for you to keep those documents on file rather than throw them out. That’s because if you’re ever audited, you need to be able to prove that you actually had the expenditures you claimed.
What happens if you can’t back up your expenditures with proof? You won’t be able to claim those deductions and you could find that you owe a hefty tax bill.
Save yourself the trouble and buy some file folders so you can store your tax records until the statute of limitations is up on the IRS’ ability to comb through your receipts.
Deciding when to dispose of your tax records
We know, it seems like almost nothing tax-related is straightforward. You can hold on to your tax returns for seven years just to be safe. But if you haven’t underreported your income, and you didn’t write off any investment or lending losses, then you’re likely safe to dispose of those documents once a time period of three years after filing – or two years after you pay your taxes – passes. If you’re still not sure, consult with a tax professional.
Author: Jeff Gitlen