How long should you keep your tax records in case of an audit?
Recommended Duration for Retaining Tax Records
The duration for retaining tax records depends on various factors related to the actions, expenses, or events recorded by the documents. The Internal Revenue Service (IRS) provides guidelines on the period of limitations, which determines how long you should keep your tax records. Here are the general recommendations:
General Rule for Record Retention
- 3 Years: Keep records for 3 years if situations 4, 5, and 6 do not apply to you.
Specific Circumstances for Extended Record Retention
- 3 Years from Filing or 2 Years from Payment: If you file a claim for credit or refund after filing your return, keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later.
- 7 Years: If you file a claim for a loss from worthless securities or bad debt deduction, keep records for 7 years.
- 6 Years: If you do not report income that you should and it is more than 25% of the gross income shown on your return, keep records for 6 years.
- Indefinitely: If you do not file a return or if you file a fraudulent return, keep records indefinitely.
- Employment Tax Records: Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
Property Records
- Until Period of Limitations Expires: Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. These records are necessary to calculate any depreciation, amortization, or depletion deduction and to figure the gain or loss upon sale or other disposition.
Special Considerations
- Nontaxable Exchange: If you received property in a nontaxable exchange, keep records on the old property, as well as the new property, until the period of limitations expires for the year in which you dispose of the new property.
Other Purposes
- Before discarding any records, ensure they are not needed for other purposes, such as by insurance companies or creditors, which may require you to keep them longer than the IRS requires.
It is important to note that these guidelines are for federal tax purposes, and state requirements may vary. Always consider the specific circumstances of your tax situation when determining the appropriate retention period for your records.
Sources:
How long should I keep records? | Internal Revenue Service 2024-08-03
Topic no. 305, Recordkeeping | Internal Revenue Service 2024-08-02
Tax Information Security Guidelines - Internal Revenue Service 2024-08-03
To protect taxpayers from scams, IRS orders immediate stop to new ... 2024-08-02
IRS shares more warning signs of incorrect claims for the Employee ... 2024-08-02
Tax preparer penalties | Internal Revenue Service 2024-07-30
Cost Segregation Audit Technique Guide - Internal Revenue Service 2024-07-29
4.10.3 Examination Techniques | Internal Revenue Service 2024-07-30
Catalog Number 16586R www.irs.gov - Internal Revenue Service 2024-08-02
Chapter 25. Estate and Gift Tax - Internal Revenue Service 2024-08-03
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Disclaimer: the information provided does not, and is not intended to, constitute legal advice. Generative AI systems can make mistakes. Verify all important information.
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