Congratulations! You’ve successfully filed your taxes so you can forget about them for a while – unless, of course, you got a filing extension. But, what should you do with all the tax records scattered across your desk? Do you need to keep them? Or can you throw them away?
Generally, the IRS has up to 3 years to audit you and check additional taxes. That’s also the time limit for you to file an amended return. So, you should keep all your tax records at least until this 3-year time limit passes. However, some tax records must be kept even longer. It’s also a good idea to hold onto copies of your returns indefinitely.
Keeping Tax Records
According to the IRS, the length of time you should keep your tax forms will depend on the type of file you’re talking about. It’s also about the kind of transaction to which it relates. For instance, you will want to keep any records to support your tax credit, income, tax deductions, and exemptions until at least the period of limitations for each tax return ends.
Here’s an overview of how long you should keep certain tax records.
One Year
Until you check them against your W-2s, it’s also a good idea to keep your payslips. If everything matches, then you can shred those payslips. Also, do the same for your monthly brokerage statements. Generally, you can shred them if they match up with your 1099s and year-end statements.
Three Years
Generally, you should hold onto any tax records to support your tax credit, income, tax deductions, and exemptions for at least 3 years after the tax-filing deadline. This applies to:
- W-2 Forms
- 1098 Forms
- 1099 Forms
- Receipts for charitable contributions
- Records showing contributions to a tax-deductible retirement-savings plan
Six Years
The IRS has up to 6 years to start an audit if you’ve failed to report at least 25% of your income. For self-employed individuals who receive multiple 1099s reporting business income from different sources, it can be easy to overlook reporting some income. To be on the safe side, keep your receipts, 1099s, and other records of business expenses for at least 6 years.
A Word to The Wise
It’s better to keep copies of your filed tax returns indefinitely. Having access to copies of your old tax records may help you prepare future tax returns and make computations if you have to file an amended return.
Plus, you never know when you’d need those old records, so it’s better to keep them than throw them away.