Taxes Done? Find Out Which Tax Records You Should Keep

Before you throw all of your tax documents up in the air after filing to celebrate the occasion, we need to discuss just how long you should keep that info in a safe and secure place.

That’s right, you should store your tax information and documentation, including a copy of your tax return, for safekeeping – just in case you need to reference it. But for how long?

Three-Year Limitation

When we talk about tax documents, we’re talking about a copy of the tax return that you filed, along with W-2s, logs for mileage, 1099s, receipts, or any paperwork that will support your tax deductions or credits that you may have claimed. This includes anything that you used to prove the state of your finances on your tax return.

As a generic rule across the board, you should keep your tax records for at least 3 years after the date in which you filed – according to the statute of limitations outlined by the IRS. For example, if you filed this year by the April 15, 2024, tax deadline, you should keep your 2023 tax return documentation until the 2026 tax deadline (typically in April of 2027).

This time frame was put in place to benefit both you and the IRS. You can benefit from this 3-year timetable because you have a set amount of time to claim any tax refund that is owed to you. On the flip side, the IRS generally will go back three years if they require substantiation for what you claim on your taxes.

Extenuating Circumstances

There’s always a “but.” When dealing with your retirement accounts, you should plan to keep your tax records for seven years after the funds have been completely withdrawn. You should also hold on to your documentation that long if you claim a bad debt deduction or a loss on securities that you labeled as worthless.

Records dealing with property (including stocks and equipment) should be kept until the 3-year statute runs out on the tax year in which you sold the property and claimed it on your tax return. If more than 25% of your income was omitted from your tax return, the IRS has six years to impose any additional tax that is required. If this situation fits your finances, keep those records for at least six years.

If you filed a fraudulent tax return, or if you refused/forgot to file a tax return, plan on keeping your financial records forever. In this case, the IRS has no statute of limitations.

Disposal Procedures

Some people decide to keep all of their financial records, forever. With technology being so convenient, it’s easy to backup all of your financial records on your computer. Be sure you’re using strong security software. It’s a good idea to backup your financial data on a device that’s not connected to the internet 100% of the time.

If you choose to throw away your records, shredding is always good advice. You can take it a step further and separate your shredding materials into different wastebaskets.

However you decide to save or dispose of your financial records, remember to be safe and secure. This is your financial life we’re talking about here!

When you use TurboTax, keep in mind that you can access your prior-year tax return or transfer your prior-year tax return for free.

We’ve Got You Covered

Don’t worry about knowing these tax rules. No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.