GREENSBORO, N.C. — Is your file cabinet at home stuffed with folders containing tax returns dating back to who knows when?
Let’s answer the question of how long you need to keep your tax records.
3 YEARS: KEEP YOUR TAX RECORDS & DOCUMENTS
“You need to keep all your tax receipts and income and expense documentation for three years after you have filed your tax return,” said Sarah Berry, CPA PLLC, on her YouTube page.
Three years is the basic answer. But not everyone's tax situation is basic. The IRS has guidelines for taxpayers.
7 YEARS: KEEP TAX RECORDS THIS LONG IF….
According to the IRS page, you need to keep tax records for seven years if you file a claim for a loss from worthless securities or a bad debt deduction.
6 YEARS: KEEP TAX RECORDS THIS LONG IF…
The IRS guidelines for keeping your records for six years include if you do not report income that you should have and it is more than 25% of the gross income shown on your return.
KEEP INDEFINITELY
if there was a year, maybe this year when you don't think you need to file a return, keep your income and expenses records and receipts indefinitely in case the IRS comes back and believes you should have filed.
SHRED, DON’T TRASH OLD RECORDS
It’s not a bad idea to keep all your old returns, but you don’t need to include all the documents that go with them.
Make sure you shred documents, don't put them in the trash. They have too much personal info on them.