How long should I retain my tax records?

Are you doing some spring cleaning and wondering when you can throw out those old tax documents?  Keep in mind, it is the burden of the taxpayer to provide sufficient proof and support for any tax position taken on a tax return.  Tax rules offer guidance as to minimum document retention periods. Below are some things to consider when determining whether or not to toss out those tax documents.

  • The statute of limitations for most tax returns is 3 years from the date you filed the return.
  • There is no period of limitations to assess tax when a return is fraudulent.
  • When your income is under reported by more than 25%, the time to assess additional taxes is 6 years from the time the return is filed.
  • To file a claim for credit or refund, the period to make the claim is 3 years from the date the original return was filed or 2 years from the date the tax was paid, whichever is later.

You may need to save documents for other legal reasons, such as, insurance claims or transfer of assets in the case of a passing family member.  Some documents should be kept indefinitely, such as, the  actual tax return, W-2s, life insurance policies, birth certificates, death certificates, Wills, Trust documents, residence or investment property documents.

When in doubt, preserve the documents indefinitely.