How Long to Keep Various Tax Records

We often get asked how long certain tax records should be kept. The information below will answer that question for you.....

Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out.

The period of limitations is the time period in which you can amend your tax return to claim a credit or refund, or that the IRS can assess additional tax. Unless otherwise stated, the years mentioned below refer to the period after the tax return was filed. Returns filed before the due date are treated as filed on the due date.

PERIOD OF LIMITATIONS:
IF you...Owe additional tax or attempt to claim a refund after filing your return.
THEN the period is...3 years

IF you...Have employment records such as W2's, 1099's, etc.
THEN the period is...4 years

IF you...Do not report income that you should and it is more than 25% of the gross income shown on your return.
THEN the period is...6 years

IF you...File a claim for a loss from worthless securities or a bad debt deduction.
THEN the period is...7 years

IF you...File a fraudulent return or do not file a return.
THEN the period is...Indefinite, No Limit

NOTE:
You should keep copies of ALL filed tax returns. They help in preparing future tax returns and making computations if you file an amended return.

KEEPING RECORDS FOR NON-TAX PURPOSES:
When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. For example, your insurance company or creditors may require you to keep them longer than the IRS does.

Also, the following records should be kept INDEFINITELY as there's no set time frame for their use:
  1) Family Papers (birth, marriage, death certificates)
  2) Health Records (immunizations, hospital stays, operations)
  3) Government Docs (social security card, passport)
  4) Estate Materials (wills, trusts)