How long keep tax forms

If the IRS or state government questions your tax deductions or business losses, you may need a copy of your return. If the IRS or state government questions your deductions or business losses, you may need a copy of your return—not to mention W-2s and other documentation—to prove your return was accurate. The IRS recommends taxpayers keep their returns and any supporting documentation for three years after the date of filing; after that, the statute of limitations for an IRS audit expires.

If you've under-reported income by 25 percent, however, the IRS can go six years back, or seven if you claim a loss for bad debt or worthless securities.

If you don't file, or if you file a fraudulent return, the IRS has no statute of limitations; so it may be best to keep your records indefinitely. Some states can look back further than the IRS. California and Arizona, for example, have a four-year statute of limitations; Montana has a five-year statute. The period for investigating if the return under-reports income or falsifies data may also be longer.

You might be wise to keep records on assets such as stocks, bonds or your house longer than the statute of limitations suggests. If you sell a house, for instance, you'll need a record of the purchase price and any improvements you've made to figure out the basis for your capital-gains tax. If you claim depreciation on a rental property or business computer, you'll need records for that, too. The IRS recommends hanging on to your files for assets until the statute of limitations expires for the year in which you sell them.

If you have an efficient record-keeping system, it can make finding information a lot easier. The IRS has no particular standards or requirements for how you organize and file material, neither do state taxing authorities; their only concern is that when they want to see a document, you're able to deliver it promptly.

IRS Publication offers detailedadvice on which records to keep, whether they're hard copy or in electronic form. If you use a TurboTax CD or download product, your tax return will be stored on your computer. It's a good idea to also print a copy for your records and keep a backup file on an external drive or disc.

This includes W-2s , s , expense tracking, mileage logs, records supporting itemized deductions and other documents. Keeping tax returns for the three-year time period is tied to the IRS statute of limitations. Under the statute, if you do not file a claim for a refund that you are entitled to, you generally have the later of three years from the date you filed the original return or two years from the date you paid the tax, to file the claim.

Likewise, the IRS generally has only three years from the filing date or due date of the return whichever is later to assess an additional tax.

In some cases, you may need to hang onto your records longer than three years. For instance, you should plan on keeping tax forms for retirement accounts such as IRAs until seven years after the account is completely wiped out. If you file a claim for a loss of worthless securities or bad debt deduction, you must keep records for seven years. Additionally, if you amortize, depreciate, or buy or sell property, you should keep property records until the statute of limitations expires for the year in which you dispose of the property.

Before getting too excited and throwing your old returns away, check to make sure you do not need to keep it for other purposes. For instance, certain creditors and even some insurance companies may require you to keep records longer than the IRS does.

If you do decide to get rid of tax documents, make sure to shred them. Tax returns contain sensitive information that identity thieves love.

Keep records indefinitely if you do not file a return. Keep records indefinitely if you file a fraudulent return. Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

Are the records connected to property? What should I do with my records for nontax purposes? About Publication , Business Expenses. About Publication , Farmer's Tax Guide. Page Last Reviewed or Updated: Aug Share Facebook Twitter Linkedin Print.