You may be tempted to throw out old tax records piling up around your home or office, but before you fire up that shredder take a look at these recommendations from IRS.gov on document retention. The period of limitations is “the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax.” You should retain supporting documents for income, deductions, and credits until the end of the period of limitations for that return.
IRS Period of Limitations — Income Tax Returns
- Keep records for 3 years (provided the exceptions below do not apply).
- 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 employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
- Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
- Keep records indefinitely if you do not file a return.
- Keep records indefinitely if you file a fraudulent return.
Keep in mind that other institutions such as insurance companies and creditors may require you to keep records for longer periods than are required by the IRS, so be sure to check before you shred!