How long do
I need to keep certain tax records for the IRS?
Some tax related time frames, such as your tax return filing
deadline or the due date to pay the IRS estimated tax payments, are
clear-cut. But when it comes to tax records and how long to keep tax
records, the answer is far from simple.
Tax records such as receipts, canceled checks, and other documents
that prove to the IRS an item of income or a tax deduction appearing
on your tax return should be kept until the statute of limitations
expires for that tax return. Usually this is three years from the
date the tax return was due or tax return was filed with the IRS, or
two years from the date the tax was paid to the IRS, whichever is
later. This is the time period in which the IRS can question your
tax return - typically three years after it is filed. There is no
statute of limitations when a tax return is false or fraudulent or
when no tax return is filed with the IRS. You should keep some tax
records indefinitely, such as tax records relating to property,
since you may need those tax records to prove to the IRS the amount
of gain or loss if the property is sold.
How long you should keep tax records depends primarily on various
statute of limitations provisions. Exceptions are below:
• Retain documents verifying the basis of property (such as real
estate or stock) until recognition of gain or loss from sale of the
property plus the three-year statute of limitations on the tax
return filed with the IRS reporting the sale.
• Keep copies of your tax returns filed with the IRS indefinitely.
• Retain tax records relating to a claim with the IRS for a tax
refund or tax credit based on bad debts or losses on worthless
securities for at least seven years.
• Because a net operating loss (NOL) can be carried back 5 years and
carried forward 20 years, it is important to keep tax records until
all net operating losses are used to offset taxable income and the
carry forward term expires, plus the three-year statute of
limitations on the tax returns filed with the IRS using the carry
• The statute of limitations is extended to six years if the IRS
finds that gross income on your tax return was understated by more
• Further, in cases where a fraudulent tax return has been filed
with the IRS, or no tax return has been filed with the IRS,
assessment by the IRS may be made at any time.
If you are an employer, you must keep all your employment tax
records for at least four years after the tax is due or paid to the
IRS, whichever is later. People in business often have expenses for
travel, entertainment, and gifts. The documentation you should keep
for each of these expenses can be found in IRS tax
Travel, Entertainment, Gift and Car Expenses.