Whether you’re a small business owner, freelancer, or individual filer, knowing how long to keep your tax returns can save you from stress and surprise audits. It might seem like just a pile of old paperwork, but when the IRS comes calling, it becomes your safety net.
This guide breaks down exactly how long you should keep tax records, and why it matters.
Too Long; Didn’t Read
- Tax returns are proof that you filed correctly and paid what you owed.
- The IRS recommends keeping tax returns and related documents for at least 3 years, but there are situations that could call for longer retention.
- We recommend scanning everything so you can easily keep track of your documents.
Why Keeping Tax Records Matters
Tax returns aren’t just forms you submit once and forget. They’re essential proof that you filed correctly, paid what you owe, and followed the rules.
Here’s why holding onto them is smart:
- Audit Defense: If you’re audited, you’ll need documents to back up your income, deductions, and credits.
- Amended Returns: If you make an error, past records make it easier to file an amended return (Form 1040-X).
- Financing & Applications: Banks, lenders, and even some government programs often request tax returns from the last 2-3 years.
The 3-Year Rule (And Its Exceptions)
The IRS recommends keeping your tax returns and related documents for at least 3 years from the date you filed or the due date of the return (whichever is later), but there are some situations where the IRS can look further back.
Situations That Call for Longer Tax Record Retention
6 Years
If you underreport income by more than 25%, the IRS can audit your return up to six years later.
7 Years
Claimed a deduction for bad debt or a worthless investment? Hold those records for seven years.
Indefinitely
If you didn’t file a return or filed a fraudulent return, there’s no statute of limitations.
Property Records
For assets like real estate, stocks, or equipment, keep records until after you sell or dispose of the item, and for as long as needed to document gain/loss or depreciation.
Documents to Keep
For each tax year, store:
- A copy of your filed tax return
- W-2s, 1099s, K-1s
- Receipts for deductions
- Bank/brokerage statements
- Mileage or business expense logs
- Charity donation receipts
Business owners should also save:
- Invoices and receipts
- Payroll records
- Loan documents
- Business license renewals
Organizing and Storing Your Tax Records
- Digitize Everything: Scan documents and store them in a secure cloud or encrypted drive.
- Sort by Year: Clearly label folders to make retrieval easy.
- Shred Safely: Once documents are past their safe-keeping window, dispose of them securely.
Final Thoughts
So, how long should you keep your tax returns? A safe baseline is three years, but for some situations (such as property sales or complex deductions) you may want to keep them longer. When in doubt, don’t throw it out.
At JBS Corp, we help individuals and business owners stay prepared, organized, and ahead of the IRS. Whether you’re looking to streamline your bookkeeping or get ready for tax season, our team is here to help.
Need support organizing your tax records or planning ahead? Contact us today.
