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The Public's Archives...
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May 1, 2007
Well, income tax time has just come and gone, so why not deal with a question that comes up every year about this time?
"HOW LONG DO I HAVE TO KEEP MY TAX RECORDS?"
Well, I have a great lawyer-ly answer for you: It depends. But let me try to explain:
First, the general rule is to keep the returns for THREE YEARS after filing it.
Second, if the return is an employment tax return, then keep it FOUR YEARS from the date of tax payment or the tax due date.
Third, if you don't report income that should have been reported (please refrain from that practice!), keep your return for SIX YEARS
Fourth, if you claim a loss from stocks or other securities that went bust, or wrote off a bad debt someone owed you, keep your return for SEVEN YEARS.
Fifth, (and I hope this doesn't apply to anyone reading this), if you didn't file a return that was due or filed a fraudulent return, KEEP ALL OF YOUR RETURNS FOREVER. (Moral: File your returns and be honest).
One caveat: When you sell property, you generally have to pay a capital gain (or prove to the IRS that no capital gain is due). That may mean keeping tax records for longer than above, since your various returns will show depreciation, amortization and the like, and all of those factors will affect your basis in the asset and hence, the amount of capital gain that may be owed.
Aren't you glad you asked?
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