How Long Should You
Keep Tax Records?
February 2004
We're often asked how long you need to keep old tax returns and the
information used to prepare them.
You
should keep tax records for at least as long as it is possible for tax
authorities to audit your return. Generally, the IRS has three years
after the return is due or filed, whichever is later, to examine your
return and assess additional tax. This is called the "statute of
limitations."
If
you've made a major error on your return (defined as omitting more than
25% of your gross income), the IRS has six years to examine your return.
There is no statute of limitations for fraudulent filing or for returns
that are not filed at all.
To
be on the safe side, keep your tax records for seven years after a tax
return is filed.
The
IRS does not require that you keep your records in any particular way.
The only requirement is that your records allow you and the IRS to
determine your correct tax liability. Keep checks, receipts, and other
records that document the income and deductions you report on your tax
return. Copies of tax returns themselves should be retained permanently.
For more information, give us a call.
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