How Long Should You Keep Tax Returns and Records?

Tax returns are official forms submitted to a tax authority, such as the Internal Revenue Service (IRS) in the United States, that report an individual’s or organization’s income, expenses, and other financial circumstances. These forms help determine tax liability and whether a refund is due or additional taxes are owed. Maintaining accurate financial records is important for preparing tax returns, substantiating deductions or credits, and responding to tax authority inquiries. Proper record-keeping ensures compliance with tax laws and can reduce penalties or missed tax benefits.

Standard Retention Periods

For most taxpayers, the general recommendation for keeping tax records is three years. This period begins from the date you filed your original tax return or the due date, whichever is later. For instance, if you filed your 2022 tax return on April 15, 2023, the IRS has until April 15, 2026, to initiate an audit for that tax year. An early-filed return is treated as filed on its due date for this timeframe.

This three-year timeframe is the statute of limitations for the IRS to assess additional tax. During this period, the IRS can examine your return and propose changes or additional tax. The three-year rule also applies to the period you have to file an amended return to claim a credit or refund.

When to Keep Records Longer

While a three-year retention period covers most situations, some require longer retention. If you omit more than 25% of your gross income from your tax return, the IRS has six years to assess additional tax. This extended period also applies if you fail to report certain foreign income exceeding a specific threshold. Retain records for six years in such cases.

If a fraudulent return is filed or no return is filed, there is no statute of limitations, and the IRS can assess tax and penalties indefinitely. Records for these scenarios should be kept permanently. If you file a claim for a credit or refund after your original return, keep records for three years from the original filing date, or two years from the tax payment date, whichever is later. For claims involving a loss from worthless securities or a bad debt deduction, the retention period extends to seven years. Records for property, like your home or investments, should be kept until the statute of limitations expires for the year you dispose of the property, ensuring documentation for gain, loss, and depreciation.

Supporting Documentation

Beyond the tax return itself, supporting documents are important to retain as they substantiate the income, deductions, and credits reported. Common income documents include W-2 forms for wages, 1099 forms for interest, dividends, or self-employment earnings, and K-1 forms for partnership or S-corporation income.

For deductions and credits, keep receipts, invoices, cancelled checks, or bank statements that prove payments for expenses like charitable contributions, medical costs, or business expenditures. Records related to property, including purchase and sale documents, improvement costs, and depreciation schedules, are also important. Maintaining relevant paperwork helps verify the accuracy of your tax filings if questioned.

Storing Your Records

Effective storage of tax records is important for security and accessibility. For physical documents, an organized filing system with labeled folders for each tax year is useful. Storing these documents in a secure location, such as a fireproof safe or a locked cabinet, protects them from damage or theft. Once records have passed their recommended retention period, dispose of them securely by shredding to prevent identity theft.

For digital records, scanning paper documents into legible digital images is common. Store these digital files in secure cloud storage services, on external hard drives, or encrypted on your computer. Regular backups of digital files are important to prevent loss. The IRS accepts electronic records if accurate and clearly reproducible.