The Internal Revenue Service (IRS) recommends that you keep your tax records for at least three years from the date you filed your original return or two years from the date you paid the tax, whichever is later. This is because the IRS generally has three years to initiate an audit.
However, there are some situations where you should keep your records for longer:
- If you underreport your income by more than 25%, the IRS has six years to collect the tax or start legal proceedings, so you should keep your records for at least six years.
- If you file a fraudulent return or don't file a return at all, the IRS recommends that you keep your records indefinitely.
- If you file a claim for a loss from worthless securities or a bad debt deduction, you should keep those records for seven years.
- If you have employees, you should keep all employment tax records for at least four years after the date the tax becomes due or is paid, whichever is later.
Remember, these are minimum periods for keeping your tax records. It may be beneficial to keep them for longer, especially if they may be needed for other purposes, such as insurance claims or for creditors.
The IRS has more information here on how long to keep your tax records.
If you have any questions or need any support at all, you are welcome to reach out to help@greenbacktaxservices.com or start a chat on our website!