Few people know how long they must keep various tax records, receipts, and full tax returns. Another question is how to safely store these documents without feeling like you are living like a hoarder.
While some of those documents were important and needed to be kept, most should have been shredded and thrown away long ago. According to the Internal Revenue Service IRS , the length of time you should keep your tax documents will depend on the type of file you are talking about and what kind of transaction to which it relates.
You will want to keep any tax records to support your income, various tax deductions, tax credit, and exemptions until at least the period of limitations for each tax return ends. Keep reading, and we will explain. According to the Internal Revenue Service IRS , the length of time you should keep your tax documents will depend on the type of record you are talking about, and what type of transaction to which it relates.
Generally, you should keep your tax records to support income, deductions, credit, and exemptions until at least the period of limitations for the tax return ends.
As you file your taxes, you may wonder if you need to keep your old tax returns. The period of time when you are still able to amend your tax returns to claim a tax credit, or refund, is called the period of limitations, according to the IRS. During this time, the IRS may still assess you with additional tax liabilities.
Specific examples of this are listed later in the article. Unless stated otherwise, a time period of limitations refers to years after the taxes were filed. Tax returns that were filed early are considered filed on the tax deadline, usually around April 15th. For , this will be July 15 th. However, the time period of limitations for returns filed on extension typically after April 15 th will be years from the actual date the taxes were filed.
Authors Note: Keep copies of your filed tax returns indefinitely. Having access to copies of your older tax returns may help in preparing future tax returns and making computations if you need to file an amended return.
I think we could all save a lifetime of tax returns on our computers without putting a dent in our storage limits. Period of Limitations that apply to income tax returns via the IRS website.
Keep records for three years if situations 4 , 5 , and 6 below do not apply to you. Keep records for three years from the date you filed your original return or two years from the date you paid the tax, whichever is later if you file a claim for credit, or refund, after you file your return.
Keep records for seven years if you file a claim for a loss from worthless securities or bad debt deduction. Keep employment tax records for at least four years after the date that the tax becomes due or is paid, whichever is later. To put it more plainly, you will need to keep your tax records between three and seven years. To be on the safe side without needing to recall the fine print, just remember to keep your tax records for seven years.
Below, I share a few exceptions. All the same, the more complicated your tax returns are, the more likely you should err on the side of caution and keep records longer than the minimum. For goodness sake, if you are owed a refund, file your taxes and get the money you are owed. As a money nerd, I am planning to keep my older tax records indefinitely.
Generally speaking, you should hold onto documents that support any income, deductions and credits claimed on your tax return for at least three years after the tax-filing deadline. Among other things, this applies to:. If, like most people, you don't itemize deductions on Schedule A , you might not need to hold onto as many documents.
For example, if you're not deducting charitable contributions, then you don't need to keep donation receipts or cancelled checks for tax purposes. For self-employed people, who may receive multiple s reporting business income from a variety of sources, it can be easy to miss one or overlook reporting some income. To be on the safe side, they should generally keep their s, their receipts and other records of business expenses for at least six years.
So, save any records related to such income until the six-year window is closed. Sometimes your stock picks don't turn out so well, or you loan money to your deadbeat brother-in-law who can't pay you back. If that's the case, you might be able to write off any your worthless securities or bad debts. But make sure you keep related records and documents for at least seven years. That's how much time you have to claim a bad debt deduction or a loss from worthless securities.
If you paid taxes to a foreign government, you may be entitled to a credit or deduction on your U. If you claimed a deduction for a given year, you can change your mind within 10 years and claim a credit by filing an amended return.
You also have 10 years to correct a previously claimed foreign tax credit. For these reasons, save any records or documents related to foreign taxes paid for at least 10 years. When it comes to investments and your property, you'll need to save some records for at least three years after you sell.
For instance, you should keep records of contributions to a Roth IRA for three years after the account is emptied. You'll need these records to show that you already paid taxes on the contributions and shouldn't be taxed on them again when the money is withdrawn. Keep investing records showing purchases in a taxable account such as transaction records for stock, bond, mutual fund and other investment purchases for up to three years after you sell the investments. You'll need to report the purchase date and price when you file your taxes for the year they're sold to establish your cost basis, which will determine your taxable gains or loss when you sell the investment.
Brokers must report the cost basis of stock purchased in or later, and of mutual funds and exchange-traded funds purchased in or later. But we recommend maintaining your own records in case you switch brokers.
When your tax return includes information related to property, keep those records until the statute of limitations — typically three years — runs out for the year in which you sell or otherwise dispose of the property. For example, if you bought a car in , use it as part of your business and then sell it in , you should keep all of those car-related tax records until the statute of limitations expires for your tax return.
In addition, keep your old property records until the statute runs out on the tax year you dispose of the new property if you exchange the property for another property to which you transfer your cost basis. For example, say you use a exchange to sell a rental property and invest the proceeds tax-free into a new rental property.
Your basis in the new property is dependent on your basis in the old rental property. As a result, keep the old rental property records until the statute runs on the tax year that you sell the replacement property. In some circumstances, the statute of limitations is longer than three years. In addition, not filing or filing a fraudulent tax return allows the IRS to audit you indefinitely.
So keep any tax records for those years permanently. But to conserve space, consider scanning all of your tax-related documents and saving them to an external hard drive or on a cloud service.
As long as you can reproduce the documents and they are legible, the IRS accepts electronic copies. See which receipts to keep for doing your taxes. Ruth Sarreal contributed to the reporting for this article.
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