How long to keep tax returns

Another special tax item is employment taxes. Keep records for employment taxes for four years from the later of the date the tax is due or the date you pay the tax. When your tax return includes information related to property, keep those records until the statute of limitations — typically three years — runs out for the year in which you sell or otherwise dispose of the property. For example, if you bought a car in , use it as part of your business and then sell it in , you should keep all of those car-related tax records until the statute of limitations expires for your tax return.

In addition, keep your old property records until the statute runs out on the tax year you dispose of the new property if you exchange the property for another property to which you transfer your cost basis. For example, say you use a exchange to sell a rental property and invest the proceeds tax-free into a new rental property. Your basis in the new property is dependent on your basis in the old rental property. As a result, keep the old rental property records until the statute runs on the tax year that you sell the replacement property.

In some circumstances, the statute of limitations is longer than three years. In addition, not filing or filing a fraudulent tax return allows the IRS to audit you indefinitely. So keep any tax records for those years permanently. But to conserve space, consider scanning all of your tax-related documents and saving them to an external hard drive or on a cloud service. As long as you can reproduce the documents and they are legible, the IRS accepts electronic copies.

See which receipts to keep for doing your taxes. Ruth Sarreal contributed to the reporting for this article. This article originally appeared on GOBankingRates. Inflation is at a year high. But these Mad Money megatrends could help you fight back.

You should keep the W-2 and forms you get from employers, for example, as well as any B or INT tax documents from banks, brokerages and other investment firms. If you lost your job last year and received unemployment benefits from the government, be sure to keep your G form, which reports the amount you have received.

If you're itemizing your deductions, keep receipts for these: credit card and other receipts, invoices, mileage logs and canceled checks.

If you've bought or sold mutual fund shares, stocks or other securities, you'll need confirmation slips or brokerage statements that say how much you paid for the investments and how much you received when you sold them. Keep a copy of all your investments for at least three years after you have sold them. Similarly, if you've sold a home, you'll need records that prove what you paid and what you received from its sale. And if you've sold a rental property, you'll need detailed records of the amount you've invested in the property over the years, as well as how much you deducted for depreciation.

It's wise to keep Schedule E, the form you fill out every year for rental income, as long as you own the property. Get instant access to discounts, programs, services, and the information you need to benefit every area of your life. You've likely heard that seven years is the perfect period to hold on to tax records, including returns. The statute of limitations has some important exceptions, and if your tax return has any of these, you'll need to keep your returns and your records longer than three years.

For example, the statute of limitations is six years if you have substantially underestimated your income. The threshold for substantial understatement is 25 percent of your gross income.

The six-year rule also applies if you have substantially overstated the cost of property to minimize your taxable gain. Keep records for seven years if you file a claim for a loss from worthless securities or bad-debt deduction. If you haven't filed a return, or if you have filed a fraudulent return, there's no statute of limitations for the IRS to seek charges against you.

Period of Limitations that apply to income tax returns Keep records for 3 years if situations 4 , 5 , and 6 below do not apply to you. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.

Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction. Keep records indefinitely if you do not file a return. Keep records indefinitely if you file a fraudulent return. Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later. Are the records connected to property?

This way, if an emergency arises, that individual will know how to access any documents they may need to keep your affairs in order.

The IRS accepts digital copies of documents as long as they are legible. This method takes up far less space and is easier to organize than a stack of papers. At the beginning of this post you were wondering how long you should keep tax returns — and hopefully you found the answer. Search for more tax help now. Looking for more information about your West Virginia refund? Wondering if you owe MO property tax? If you are filing as single or head of household, there are some guidelines to know.

Read on to learn what the filing status requirements are for your taxes.