How long should you keep your tax records? In general you should retain tax records and all supporting documents until the time to audit that return runs out. This is generally three years after the due date of your return, or the date you file it, whichever is LATER. However, some supporting documents may be discarded sooner.
Weekly/monthly pay stubs, monthly bank or investment statements, or similar documents should be kept until the end of the year to compare to your W-2, 1099 or other yearly summary. If the totals match the yearly summary you only need to keep the annual statement.
You should keep documents that support any income, deductions and credits claimed on your tax return for at least three years. If you take the standard deduction then only income-related documents need to be retained. Among things you should save with your return are W-2 or 1099 forms showing income, form 1098 if you deducted mortgage interest, canceled checks AND receipts for charitable contributions or other deductible expenses or credits claimed.
The time for the IRS to audit your return is extended to six years if you omitted at least 25% of your income. This rarely happens with W-2 workers. But if you are self-employed or a “gig” worker it is easy to overlook some income. Those taxpayers should hold onto their records of income and expenses for at least six years.
Records relating to real property or other investments may need to be retained for at least three years after you sell the property or investment. For example, preserve documents and receipts for the purchase of your home, or any improvements, for three years after you've sold the home. If you inherited investment property or received it as a gift, keep documents and records to establish the property's basis for at least three years after you sell the property. Contributions to IRAs and retirement accounts should be kept for at least at least three years after the account is depleted.
It's a good idea to hold onto copies of your tax return itself indefinitely.
You may wish to hold on to your W-2 forms until you retire to verify until your income with Social Security and assure you receive your proper benefits.
Certain taxpayers who paid taxes to a foreign government or claimed bad debt or securities losses may need to retain their tax records longer.
States have different rules about record retention. For example, California has up to four years to audit California state income tax returns, unlike the three years for federal returns. If you have any questions you should consult your tax professional.
George J. Eigenhauser Jr. is an attorney at law, licensed in the state of California since 1979. He has served on the Winn Board of Directors and as CFA liaison to Winn for more than 10 years. His expertise in the area of wills, trusts and estate planning allows him to assist donors with planned giving decisions. He is also the legislative coordinator for the Cat Fanciers’ Association, Inc. and has served on the CFA board for 15 years.