How Long Should Tax Documents Be Kept?
I hope you haven’t lost or thrown away your latest tax documents yet. Even after you go through another tax season, you will need to keep these documents in a safe place for the next few years.
You must keep your tax returns indefinitely (an electronic copy of everything is fine). This is not necessarily in the best interest of the IRS, but because some lenders and other types of financial institutions may require this documentation long before the IRS stops caring about it.
However, the storage period for supporting documents may vary. The IRS recommends three years (with some exceptions) from the date of filing as it is usually required to initiate an audit during this time window , while some tax experts say seven years is the best time frame.
Here are the documents you will want to keep for at least three years:
- W-2s
- 1099s income reporting
- 1099s reporting capital gains, dividends, or interest
- Form 1098 (for mortgage interest deduction)
- Income from charity
- Any other documents that track detailed deductions (alimony, mileage logs, expenses, etc.)
Again, how you save all this information is entirely up to you. Electronic media are probably the most convenient for people, and the IRS does not specify how they should be stored.
Other types of documents you may want to keep indefinitely include:
- Form 8606 certifying that you have already paid taxes on non-deductible IRA contributions.
- Form 5498 for IRA Contributions
- Any documents related to depreciation , purchase or sale of a home (or other type of property), such as final statements of insurance forms and property tax estimates.
- Warehouse write-off documents
If you are underreporting your income by more than 25%, the IRS recommends keeping your records for six years. And if you are not filing or are filing fraudulently, the IRS advises you to keep your returns indefinitely. There is no limitation period for audit in case of violation of the law.
This post was originally published on April 26, 2018 and was updated on March 23, 2020 by Lisa Rowan. Updates include: revised feature image; removed dates related to the original post; checked links for accuracy; corrected and reformatted parts of the text for clarity.