How Long Do You Have to Keep Tax Records?

The information in this article is up to date for tax year 2024 (returns filed in 2025).

Tax season is behind you, and you’ve filed your return—phew! But now you’re left with the question: How long do you have to keep tax records? It’s one of those things we all wonder about once we’ve crossed the finish line. Do you need to hold onto those piles of paperwork forever? Or can you finally toss them out and reclaim some space? In this guide, we’ll break down exactly how long to keep tax records (spoiler: it’s not as complicated as it sounds) and why holding onto the right documents can save you from headaches down the road. Let’s get to it!

Why Keeping Tax Returns Is Important

Keeping your tax returns is important for several reasons, each with its own implications for your financial well-being and legal obligations.

Legal Obligations

The IRS requires taxpayers to maintain records for a certain period, primarily to ensure compliance with tax laws. These records verify the income, deductions, and credits reported on your tax return. Failing to keep these records can result in complications if the IRS requests documentation.

Tax Audits

Typically, the IRS can audit a tax return for up to three years after it was filed. However, if you underreport your gross income by 25% or more, they can extend this period to six years. In cases of fraud or failure to file a return, there is no statute of limitations, meaning the IRS can audit you indefinitely. Use ezTaxReturn for a quick, easy, and stress-free tax filing experience—and get your maximum refund!”

Future Reference

Old tax returns can be invaluable for financial planning. They serve as proof of income and can be required when applying for loans, mortgages, or even certain jobs. Having detailed records can expedite these processes and provide a clear financial history.

Impact on Tax Refunds

Past tax returns are essential when amending previous filings. If you discover errors or omissions on a return, having the original documentation allows you to file amendments more accurately, potentially leading to additional tax refunds or adjustments.

Maintaining your tax records not only helps you stay compliant with IRS regulations but also supports future financial endeavors and ensures you can address any discrepancies in your tax filings efficiently.

How Long Should You Keep Your Tax Returns?

Store Your Pay Stubs for 1 Year

Everybody loves a chance to crumple up a piece of paper and shoot that (imaginary) 3-pointer into the trash basket! But when it comes to your paystubs, don’t just toss them once you cash your check. Save them until you can match the information to your W-2. Once you’ve verified that the totals are correct, then you can let them go.

Keep Your Tax Return for At Least 3 Years

It’s better to be safe than sorry. So as a general rule, it’s important to keep a copy of your tax return and supporting documents for at least three years after you’ve filed. Generally, if the IRS has questions about your return or needs to assess additional tax, they’ll do it within this time frame. Understanding the due date for filing returns is crucial, as it affects the statute of limitations for audits and claims. It’s also the period in which you can amend your return to claim a tax credit or deduction you may have missed the first time around. Save anything that can verify your income, credits, or deductions. For example, your W-2 or 1099, tuition payments and charitable donation receipts.

6 Years if You Didn’t Report All Your Income

Before you fire up that shredder, understand that the three-year rule doesn’t apply to everyone. If you omitted more than 25% of your gross income on your tax return, the IRS has six years to perform an audit. So, in this case, hold on to your records until that window has closed. It’s important to know exactly how long to keep tax returns—especially if you’re unsure whether you’ve reported all your income correctly.

7 Years or More for Certain Tax Records

In some situations, you may need to keep your records for 7 years or more. For example:

If you file a claim for a loss from worthless securities or a bad debt deduction, the IRS recommends keeping your tax records for at least seven years.
If you sold a home and excluded capital gains from your tax return, keep related documents for as long as you own the property, plus an additional 3 years.
If you didn’t file taxes at all or filed a fraudulent return, the IRS can come after you indefinitely.

Even if you don’t need to keep documents for this long, it’s not a bad idea to save them for your own peace of mind. You can store your records digitally, which will help you avoid letting them pile up physically.

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Types of Tax Records to Keep

When it comes to tax record-keeping, it’s essential to know what types of documents to keep and for how long. The IRS recommends keeping tax records that support any income and tax deductions and credits claimed on your tax return. These records can include:

Tax Documents: W-2 forms, 1099 forms, and receipts for charitable donations.
Business Records: Receipts, invoices, and bank statements for business expenses.
Investment Records: Statements and records of contributions to retirement accounts such as IRAs or Roth IRAs.
Property Records: Home sale documents, property improvement receipts, and associated legal records.
Retirement Account Records: Contributions and statements for retirement savings accounts.

By keeping these documents organized and accessible, you can ensure that you have the necessary proof to support your tax return and any claims you make.

Digital Storage and Organization

In today’s digital age, it’s easier than ever to store and organize your tax records digitally. Here are some tips for digitizing your financial and tax records:

Digitize Your Financial and Tax Records

Digitizing your financial and tax records can help you stay organized and ensure that you have access to your records when you need them. Here are some steps to follow:

Scan your tax documents, including W-2 forms, 1099 forms, and receipts for charitable donations
Save your digital records in a secure location, such as an external hard drive or cloud storage service
Organize your digital records by year and type of document
Consider using tax software or a digital filing system to help you stay organized and ensure that you have access to your records when you need them

By following these steps, you can keep your tax records safe and easily accessible, making tax time a breeze.

When to Consider Disposing of Tax Records

Once the IRS statute of limitations has passed, it’s usually safe to dispose of your old tax records. However, consider keeping documents for longer if they might be important for financial planning or proof of income. In cases of property sales or certain deductions, keeping records for longer periods may be beneficial.

Shredding Tip: If you’re ready to toss your physical documents, make sure to shred them to protect your personal information and avoid potential identity theft.

What Happens if You Don’t Keep Tax Returns?

Failing to keep your tax returns and related records can lead to several potential consequences, impacting both your financial and legal standing.

Potential Consequences of Losing Tax Records

Losing your tax records or failing to keep them for the required duration can complicate your financial life. Without these documents, you may struggle to provide proof of income, deductions, and credits claimed on your tax return. This can result in issues if the IRS requests documentation during an audit.

Impact on Audits and Future Returns

If you don’t have your tax records, you might miss out on deductions or make errors in future returns. During an IRS audit, the absence of supporting documentation could lead to the disallowance of deductions and credits, resulting in additional tax liabilities. Moreover, without past returns, amending previous filings or correcting errors becomes challenging.

Legal and Financial Risks

The legal and financial risks of not maintaining your tax records are significant. You may face penalties for underreporting income or failing to substantiate claims made on your tax return. In severe cases, the IRS can impose fines or take legal action. Additionally, not having access to your financial history can hinder loan applications, mortgage approvals, and other financial endeavors.

Maintaining organized tax records, whether digitally or physically, is crucial to avoid these pitfalls and ensure you’re prepared for any IRS inquiries or financial opportunities that arise.

Recap

To recap, most taxpayers should keep their tax returns for at least three years, but depending on your situation, you may need to retain your records for six or seven years—or even indefinitely in cases of fraud or unfiled returns. Remember, keeping your records organized, whether digitally or physically, will ensure you’re always prepared for audits, tax amendments, or future reference.

Pro Tip: Store your records in the cloud for easy access and peace of mind.

If you haven’t filed your taxes yet, don’t stress! ezTaxReturn makes it easy to file quickly and accurately. Plus, you’ll get your biggest possible refund, guaranteed.