How Long to Keep Tax Returns: 7 Questions to Consider

How long should you keep your tax returns and records? For most people, three years is a good time frame, but it could be much longer in many situations. Plus, it can often be a good idea to hold onto records longer than the required time for other non-tax reasons.

Keep reading to find out exactly how long you should keep your tax records in your situation. The answer may surprise you!

What is the Period of Limitations?

According to the IRS, the period of limitations is the “period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax.” To measure the period of limitations, it starts at the time when the tax return was filed.

For the actual tax return itself, the IRS advises keeping them forever. I would 100% agree with that. Especially in the digital age, where everything can be saved on a hard drive or backed up in the cloud, there's no reason to toss your actual tax returns.

How Long to Keep Tax Returns

Period of Limitations That Apply to Income Tax Returns

1. Keep records for 7 years if you file a claim for a loss from worthless securities. 2. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax.

3. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return. 4. Keep records indefinitely if you do not file a return. 5. Keep records indefinitely if you file a fraudulent return.

Unique Requirements for Property Owners

According to the IRS, you should keep records relating to property “until the period of limitations expires for the year in which you dispose of the property.” These documents would include anything that supports your calculations for depreciation, amortization, or depletion deductions.

For example, if you bought a house 20 years ago and sold it this year, you would need to keep any records related to that property that supports the deductions claimed on your tax return for an additional three years.

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