Tax season is in full swing, and millions of Americans are filing their returns before the April 15, 2025, deadline. But once you’ve filed, what should you do with all those tax documents? Toss them? Store them forever? The IRS has specific guidelines on how long you should keep tax records, and the answer depends on various factors.
Let’s break it down so you can stay compliant and avoid potential tax issues down the road.
Table of Contents
Duration
The IRS requires taxpayers to keep their tax records for a specific amount of time, depending on the type of return and the situation. Here’s what you need to know:
| Situation | How Long to Keep Records |
|---|---|
| Standard tax return (no special cases) | 3 years |
| Claiming a refund or credit | 3 years from filing or 2 years from payment (whichever is later) |
| Reporting a loss from bad debt or worthless securities | 7 years |
| Underreported income (more than 25% of gross income) | 6 years |
| No tax return filed | Indefinitely |
| Fraudulent tax return filed | Indefinitely |
| Employment tax records | At least 4 years |
These guidelines help taxpayers determine how long they need to keep important financial records before safely discarding them.
Why It Matters
Keeping your tax documents for the right amount of time is crucial. If the IRS audits you, having records to support your income, deductions, and credits can save you a lot of trouble. Additionally, if you ever need to amend a return or file a claim for a refund, having past records readily available makes the process much easier.
What to Keep
Not sure what records you should hold onto? Here’s a quick list of documents that may be necessary for future reference. Tax returns, including both federal and state returns, should always be kept. W-2s and 1099s, which report different types of income, are essential to have on file.
Receipts for deductions, such as medical expenses, charitable donations, and business expenses, should be saved in case they are ever questioned. Investment records should be kept to track capital gains and losses over time. Property-related documents, including mortgage statements and home improvement receipts, can be useful for tax deductions and property sales.
Retirement account records, such as IRA contributions and 401(k) withdrawals, are also crucial for tax and financial planning. Keeping these documents organized can prevent headaches if you ever need to provide proof to the IRS.
How to Store Records
Storing tax documents securely is just as important as keeping them. Using digital copies is a great way to ensure records are not lost. Scanning important documents and storing them in a secure cloud or external hard drive makes access easier while keeping them safe.
If you prefer physical copies, keep paper documents in a fireproof and waterproof file cabinet to protect against potential disasters. When it is time to dispose of old tax records, shredding them is the safest way to prevent identity theft and fraud.
With these storage methods, you’ll ensure your records are safe, accessible, and protected.
Keeping tax records for the appropriate time can save you from unnecessary trouble with the IRS. While three years is the standard, some situations require you to hold onto documents much longer.
Organizing and securely storing your records will make tax season easier and give you peace of mind in case of an audit or refund claim.
FAQs
How long should I keep tax records?
Keep them for at least 3 years, but some cases require longer retention.
What happens if I don’t keep my tax records?
If audited, you may struggle to prove deductions, income, or credits.
Can I store tax documents digitally?
Yes, the IRS accepts digital copies as long as they are clear and accessible.
When can I throw away old tax returns?
After 3 to 7 years, unless you fall under special cases requiring longer retention.
Do I need to keep employment tax records?
Yes, keep them for at least 4 years after the tax was due or paid.
