How Long to Keep Tax Records: A Simple Guide for Individuals and Businesses
Keep tax records as long as the IRS can still question the return they support. For most people that's three years, but some records need to be kept much longer. Here's a simple guide.
By the Enrolled Agents and CPAs at A&W Tax Services · Updated
The general rules
- 3 years from filing: most returns and the records that support them
- 6 years: if you left out more than 25% of the income on your return
- 7 years: if you claimed a loss from worthless securities or a bad debt
- Indefinitely: if a return was never filed or was fraudulent
- 4 years: payroll tax records, from the date the tax was due or paid, whichever is later
Records to keep longer
Keep records for property, such as a home, rental property, stocks or business equipment, until the limitation period runs out for the year you sell or dispose of it. That means the purchase records, improvements and depreciation can be needed decades later to work out your gain.
It's also smart to keep copies of the returns themselves permanently. They help with amended returns, loan applications, Social Security questions and preparing future returns.
What business owners should keep
- Bank and credit card statements
- Receipts and invoices for expenses
- Mileage logs and vehicle records
- Payroll records, W-2s, 1099s and quarterly payroll returns
- Asset purchase records and depreciation schedules
- Texas sales tax and franchise tax filings
Paper or digital?
The IRS accepts digital copies as long as they're legible and complete. Scanning receipts and keeping a backup of your accounting file is often more reliable than a box of paper. If your books are kept in QuickBooks and reconciled monthly, most of what you'd need for an audit is already organized.