How Long Should You Keep Your Tax Returns?

Keeping accurate tax records is important for individuals to manage their financial affairs. These records document the information reported on annual tax returns, providing a history of income, deductions, and credits. Maintaining organized records simplifies preparing future tax filings and can address questions about past submissions. Proper record retention also supports personal financial planning.

Standard Retention Periods

The Internal Revenue Service (IRS) has a defined period, known as the statute of limitations, during which it can assess additional tax. For most taxpayers, the standard recommendation is to keep tax returns and all supporting documents for three years from the date the original return was filed or the due date, whichever is later. For example, a tax return filed on April 15, 2025, for the 2024 tax year should be retained until April 15, 2028. This period allows time to respond to IRS inquiries or audit notices.

A six-year retention period applies if a taxpayer substantially understates their gross income, meaning more than 25% of the reported gross income is omitted. For instance, if $100,000 was reported but $130,000 was earned, the six-year statute of limitations applies. This longer period allows the IRS to discover significant discrepancies. Taxpayers should review returns for omissions that could trigger this extended period.

Situations Requiring Extended Retention

Some circumstances require keeping tax records longer than the standard three or six years. If an individual does not file a tax return, the IRS has an indefinite period to assess tax. If a fraudulent return is filed, there is no statute of limitations, meaning records should be retained permanently. These situations highlight the importance of proper filing and honest reporting to avoid perpetual tax liability.

A seven-year retention period applies if a taxpayer claims a loss from worthless securities or a deduction for a bad debt. This longer period allows time for verification of the claimed loss or deduction, as the timing of worthlessness or uncollectibility can be subject to review. All supporting documentation should be kept for seven years.

Records related to property basis, such as for a home, rental property, or investments, should be kept for an extended duration. These include purchase records, improvement statements, and transactions affecting the cost basis. Such records are necessary for calculating the correct gain or loss when the property is sold, which may be decades after acquisition. Keep these records for at least three years after selling the property and filing the tax return reporting that sale.

Supporting Documents to Retain

Beyond the tax return itself, various supporting documents are important to retain. These documents substantiate the income, deductions, and credits reported on the tax form. Key income documents include Forms W-2 for wages and Forms 1099 for other income like interest, dividends, or independent contracting. These forms reflect the amounts reported on a tax return.

For deductions and credits, keep receipts, canceled checks, and bank statements as proof of payment. Receipts for medical expenses, charitable contributions, or business expenditures support itemized deductions. Records of educational expenses or child care costs are needed to claim relevant credits. Investment statements, including purchase and sale confirmations, should also be kept to verify capital gains or losses.

Maintaining Secure Records

Proper storage of tax records is as important as knowing how long to keep them. For physical documents, a secure, fireproof safe or locked filing cabinet protects against damage or theft. Organize documents by tax year in clearly labeled folders for easy retrieval. Keep physical records in a location not susceptible to water damage or other environmental hazards.

For digital records, secure storage solutions are available and often preferred for convenience and accessibility. Options include encrypted external hard drives, secure cloud storage, or password-protected files on a computer. Regular backups are important to prevent data loss from system failures or cyber incidents. Protecting personal identifying information through strong passwords and multi-factor authentication is also a key security measure.