Client Question of the Week: How Long Am I Required to Keep My Tax Records?

Question: How long am I required to keep my tax records?

Answer: “Audit-proofing” your return means having the proper documentation to prove a deduction if you are audited. We have written in the past about what documentation is required (see our ‘Surviving an IRS Audit Series' link under Categories on our home page).

But how long you should keep records depends on various factors:

1. If you owe additional taxes, and situations 2, 3, and 4 do not apply – then 3 years.
2. If you do not report income that you should report and it is more than 25 percent of your gross income shown on your return – then 6 years.
3. If you file a fraudulent income tax return – No limit.
4. If you do not file a return – No limit.
5. If you file to amend a previous return – then the later of 3 years or 2 years after the tax was paid.
6. If you amend your return due to a bad debt deduction or loss from a worthless investment security – then 7 years.
7. If you have employees – then your employment tax records must be kept for 4 years.

Like any good CPA, I need to add a disclaimer: Unfortunately, it is impossible to offer comprehensive tax info over the Internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.