What Tax Documents Should You Keep and for How Long?

July 8th, 2022 • Blog

Amila Hadzic

You may have already filed your 2020 or 2021 tax return, but don’t throw away your tax statements and support! Upon IRS examination of your tax return, the IRS has the right to request the support of how you arrived at your reported income, expenses, and tax credits. If you cannot provide this support, you could face unfavorable adjustments to your tax return. No one wants this!

There are some documents that need to be kept for a certain period of time. This includes your tax return and any supporting documents such as W-2s, 1099s, mileage log, or any records that support income, deductions, or credits taken on your return. Generally, you should keep tax returns and any documents that relate to the tax return for three years at a minimum, but there are situations where records should be kept longer.

Years of Required Record Retention:

3 Years
Keep documents for three years from the date you filed your return if the situations below do not apply to you.

4 Years
Unemployment tax records should be kept for four years since the due date or the date the tax is paid. Depending on which date is later, the due date or date paid, is when the clock starts.

6 Years
In cases where 25% or more of your gross income is not included in your tax return, keep documents for six years.

7 Years
Keep tax documents for 7 years if you file a loss from worthless securities or bad debt.

Keep documents for any records for property purchases indefinitely. In addition, if you never filed a tax return, or a fraudulent return is filed, then keep your records indefinitely.

It is important to keep in mind that creditors or insurance companies have different requirements as to how long you should keep certain documents. The above may not capture all situations and if you are not certain, reach out to your accountant, insurance company, or bank before discarding any important documents.

It is a great time of year to get and stay organized before the next tax season is upon us! We hope this article provided some insight (hopefully not fear) into the importance of record retention.



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