As the tax-filing deadline closes in, you may wonder: how long do I actually need to hold onto my tax documents? In general, the Internal Revenue Service (IRS) recommends that you keep tax returns and relevant documentation handy for three years, which is the typical statute of limitations for an IRS audit. However, there are exceptions where you shouldn’t toss your tax returns so quickly.

Keep your tax documents for six years if:

  • You under-reported your income by more than 25 percent on your tax return. In this case, the statute of limitations is doubled; the IRS has six years to decide whether they want to conduct an audit.

Keep your tax documents for seven years if:

  • You made a bad investment and wrote off the loss as worthless security. The IRS has seven years to approach you with questions.

Keep your tax documents indefinitely if:

  • You have committed tax fraud. If the IRS suspects illegal information on a tax return, there is no statute of limitations, and they may investigate at any time.
  • You didn’t file a tax return. If you didn’t earn enough income to require filing, retain proof in case the IRS questions your missing tax year.

Keep in mind – just because your tax records are no longer needed for IRS purposes, doesn’t mean you should immediately discard them. First, confirm that other entities like your insurance company or creditors do not need them. Some even recommend holding onto all documents indefinitely in the chance the IRS misplaces your files.

If you have questions about your tax returns and accompanying documentation, contact the tax advisors at Doeren Mayhew today.