How Long Do You Need Your Tax Records?

Joe Giordano
partner
Whisman Giordano
 

What 2018 tax records can you throw away once you’ve filed your 2018 return? The answer is simple…none. You need to hold on to all of your 2018 tax records for now, but it’s the perfect time to go through old tax records and see what you can discard.

The 3-year and 6-year rules

At minimum, keep tax records for as long as the IRS has the ability to audit your return or assess additional taxes, which generally is three years after you file your return. This means you potentially can get rid of most records related to tax returns for 2014 and earlier years. However, if you filed an extension for your 2014 return, hold on to your records at least until the three-year anniversary of when you filed your extended return.

On the other hand, the statute of limitations extends to six years for taxpayers who understate their adjusted gross income (AGI) by more than 25%. What constitutes an understatement may go beyond simply not reporting items of income. So, a common rule of thumb is to save tax records for six years from filing, just to be safe.

What to keep longer

You’ll need to hang on to certain tax-related records beyond the statute of limitations:

  • Keep tax returns themselves forever, so you can prove to the IRS that you actually filed a legitimate return. There’s no statute of limitations for an audit if you didn’t file a return or you filed a fraudulent one.
  • Hold on to W-2 forms until you begin receiving Social Security benefits. Questions might come up regarding your work record or earnings for a particular year, and your W-2 could provide the documentation needed.
  • Retain records related to real estate or investments as long as you own the asset, plus at least three years after you sell it and report the sale on your tax return (or six years if you want to be extra safe).
  • Keep records associated with retirement accounts until you’ve depleted the account and reported the last withdrawal on your tax return, plus three (or six) years.

 

Other documents

We’ve covered retention guidelines for some of the most common tax-related records. If you have questions about other documents, feel free to contact us. We are here to help!

About the author 

Joe is a 2004 graduate of Mount Saint Mary’s University, with a bachelor’s degree in accounting. He is also a 2000 graduate of Archmere Academy in Claymont, Delaware. Joe started with the firm in 2002 as a part-time intern, joining full-time in 2004.

Since then, he has worked with a myriad of clients, including entrepreneurial firms, agricultural businesses and nonprofit entities, including those with OMB A-133 audits. Joe, along with the firm, contributes to Toys for Tots, Goodwill Industries, as well as several other community organizations. He is a member of the American Institute of Certified Public Accountants and the Delaware Society of Certified Public Accountants.

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