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Recordkeeping: How Long Should Documents be Kept?

According to the IRS, you must keep records such as receipts, canceled checks, and other documents (W-2s, 1099s, invoices, etc.) that support either an item of income, a deduction, or a credit appearing on a tax return for as long as those records may become material in the administration of any provision of the Internal Revenue Code. In short, you are required to keep all records that support anything reflected on your tax return for at least 3 years. Taxpayers should also remember to keep copies of their previously filed tax returns, including any amended returns, to assist in preparing future returns.

Special situations requiring documents to be retained longer: 

  • 7 years - Keep records for 7 years if you file either a claim for a loss from worthless securities or a bad debt deduction.

  • 6 years - Keep records for 6 years if you did not report income that you should have reported, and the amount of unreported income is greater than 25% of the gross income shown on your tax return.

  • 4 years - Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

Note, if you do not file a return or choose to file a fraudulent return, then the IRS has an infinite amount of time to assess taxes, penalties and interest against you. Under these circumstances, you are required to keep documents indefinitely.

You should also ask yourself the following questions before deciding whether to throw a document away or keep it.

Are the records connected to property?

Generally, keep records relating to property until the period of limitations expires for the year in which you dispose of the property. You must keep these records to determine any deduction for depreciation, amortization, or depletion, and to calculate the gain or loss when you sell or otherwise dispose of the property.

If you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up (increased by any money you paid). You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property.

What if my records are no longer needed for tax purposes?

When your records are no longer needed for tax purposes, do not discard them until you first check to see if you are required to keep the records longer for other purposes. For example, your insurance company or creditors may require you to keep documents longer than the IRS does.

For more information, see the IRS's How long should I keep records? page.

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