How Long Should You Keep Tax Records? A Complete Guide

Why Good Record keeping Matters

When tax season comes around, having your financial records organized can save you time, stress, and money. But one question many taxpayers ask is: how long should I keep my tax documents?

The answer depends on what type of document it is, what kind of income or deduction it supports, and whether any special circumstances apply to your return. The IRS sets clear rules on record retention, and understanding them helps you stay compliant while avoiding unnecessary clutter.

In this article, we’ll break down the IRS guidelines for keeping tax records, explain why certain documents need to be kept longer than others, and share tips for managing your paperwork effectively.

The General 3-Year Rule

For most taxpayers, the 3-year rule applies. This means you should keep records that support income, deductions, or credits on your tax return for at least three years from the date you filed the return.

Why three years? That’s the standard period of limitations—the timeframe in which the IRS can audit your return, or you can file an amended return to claim a credit or refund. Once this period ends, the IRS typically cannot question your return, and you cannot make changes for that year.

Example: If you filed your 2022 tax return on April 15, 2023, you should keep the supporting documents until at least April 15, 2026.

Situations That Extend Record Retention

While three years is the general rule, there are several situations where you need to keep records longer:

• Two Years for Refund Claims
  If you file a claim for a refund or credit after submitting your original return, keep the records for two years from the date you paid the tax, or three years from the filing date—whichever is later.
  
  
• Seven Years for Bad Debt or Worthless Securities
  If you file a claim for a loss from worthless securities (like stocks that no longer hold value) or a bad debt deduction, you must keep records for seven years. These cases often require proof long after the standard three-year period.
  
  
• Six Years for Substantial Underreporting
  If you did not report income that should have been reported, and it’s more than 25% of the gross income shown on your return, the IRS has up to six years to audit. In this case, your records should be kept at least that long.
  
  
• Indefinitely for Fraud or Non-Filing
  If you never filed a tax return or filed a fraudulent return, there is no time limit for the IRS to assess tax. That means you should keep your records indefinitely.
  

Employment and Property Records

In addition to income tax records, other types of records come with their own rules:

• Employment Tax Records
  If you are an employer, you must keep all employment tax records for at least four years after the tax is due or paid—whichever is later. These records help verify wages, payroll taxes, and compliance with IRS requirements.
  
  
• Property Records
  Documents related to property—such as real estate, vehicles, or investments—must be kept until you dispose of the property. Why? Because you need these records to calculate depreciation, amortization, or depletion deductions as well as to determine the gain or loss when the property is sold.
  
  If you received property in a nontaxable exchange, your basis in the new property depends on the basis of the old one. That means you’ll need to keep the original property records until you eventually sell or dispose of the new property.
  

Keeping Copies of Filed Tax Returns

Even though the supporting documents may have an expiration date, the IRS recommends keeping copies of your filed tax returns indefinitely.

Why? Copies of old returns are invaluable for:

• Preparing future returns
  
  
• Providing information if you file an amended return
  
  
• Confirming past income or deductions for financial institutions, lenders, or even immigration purposes
  
  

Keeping digital or paper copies of your actual returns gives you a reliable reference whenever needed.

Records for Nontax Purposes

Before discarding any financial documents, consider whether they may be required for nontax purposes. Creditors, insurance companies, and even government agencies may request old records as proof of income, expenses, or ownership.

For example:

• Your insurance provider may ask for documentation of property values in case of a claim.
  
  
• Your lender may require several years of returns and supporting records before approving a mortgage or refinancing.
  
  

In these cases, holding on to your records longer than the IRS requires could save you time and trouble later.

Tips for Organizing and Storing Tax Records

Knowing how long to keep records is only part of the equation. The other part is making sure they’re organized and accessible. Here are some practical tips:

1. Go Digital: Scan receipts, W-2s, 1099s, and other important documents. Store them securely on a cloud service or encrypted drive.
   
   
2. Create Categories: Group documents by year and by type (income, deductions, property, employment taxes).
   
   
3. Use Secure Storage: Keep physical copies in a fireproof safe or locked filing cabinet.
   
   
4. Set a Review Date: At tax time each year, review your old records and safely discard anything past the required period—unless it’s still needed for nontax purposes.

Final Thoughts: Better Safe Than Sorry

When it comes to tax records, the safest approach is to keep them at least as long as the IRS requires and often a little longer. While the 3-year rule is standard, special situations may extend the timeline to 6 years, 7 years, or indefinitely.

By keeping good records, you not only protect yourself in case of an IRS audit but also simplify your financial life. Whether you’re filing taxes, applying for a loan, or making big financial decisions, having your documents in order will give you confidence and peace of mind.

At Resoly, we believe that smart recordkeeping is a key part of financial wellness. Stay organized, stay compliant, and take control of your financial future.

‍