Tax Basics

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How Long to Keep Tax Records

April 7, 2016 : H&R Block

Editor’s Note: This article helps you identify how long you should keep tax records. It was updated on Nov. 3, 2016.

If your tax return has any level of complexity, you probably amass a large stack of paperwork every spring. There’s W-2s and 1099s, health insurance statements, documents from your mortgage and student loans, or information from your IRA or other investments. And, of course, there’s the actual tax return itself. So. Much. Clutter.

Before getting into the specifics, there are a few golden rules that you must know.

  1. It is YOUR responsibility to keep track of these records. If you use a tax preparer, you cannot rely on them to store this information for any period of time.
  2. The safest bet is to keep everything, forever. If you did not file a return for a given year, if the return was found to be fraudulent, or if some other unfortunate incident crops up, you may need these documents. The possibility is low, so if you stick to the following guidelines you will likely be covered. But, if you want to err on the side of caution, keeping everything is the way to go.
  3. You can keep electronic copies instead of paper. The storage method must be secure, must facilitate your ability to retrieve specific information and must produce legible files.

What to Keep Forever (or Almost Forever)

Annual brokerage statements, receipts for large purchases and receipts relating to capital improvements for your home should be kept indefinitely. In some cases, you may discard the receipts after three years after the home is sold.

Keep for 7 Years:

If you filed a tax return that included a loss from worthless securities or a bad debt deduction, keep that tax return and all the supporting documents for at least seven years.

Keep for 6 Years:

If you had income that was not reportable on your return, and it was more than 25% of the gross income shown on your return, keep the return and all related financial documents for at least six years.

Keep for 4 Years:

Any records related to employment taxes (those withheld or those paid on behalf of your employees) should be kept for at least four years after the return was due or is paid, which ever is later.

Keep for 3 years:

All tax records. That includes your actual tax return and any document that supports something shown on the return.

The IRS guidance is that these records should be kept until the period at which you can still amend that return closes, or the IRS could assess additional tax. For most taxpayers, this means at least three years following the date you filed the return, or two years from the date you paid the tax on that return, whichever is later.

So while it may be tempting to throw out all those pieces of paper after filing a return, it’s necessary to keep them at least for a few years. However, you are not required to store the physical copies. Read more about electronic storage options and ways to protect your tax documents.

Hopefully this article helped frame how long to keep tax records and supporting documents that aren’t related to your tax return?


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