Here's how long you should keep these old tax records

Taxes » Tax Filing »

Receipts with bookkeeping ledger and calculator © RTimages / Fotolia

Maintaining tax filing documentation is critical. It contains the answers to questions the Internal Revenue Service could ask years after you file your return.

Although the IRS doesn't require you to keep your records in a particular way, it does urge taxpayers to keep them "in an orderly fashion" and in a safe place.

Basic records
FOR items concerning your ...KEEP as basic records ...
IncomeForm(s) W-2
Form(s) 1099
Bank statements
Brokerage statements
Form(s) K-1
ExpensesSales slips
Canceled checks or other proof of payment
HomeClosing statements
Purchase and sales invoices
Proof of payment
Insurance records
Form 2119 (if you sold a home before 1998)
InvestmentsBrokerage statements
Mutual fund statements
Form(s) 1099
Form(s) 2439
Retirement accounts

Form 5498, Roth and traditional IRA contributions
Form 8606, nondeductible IRA contributions
Annual statements
401(k) and other company-sponsored plan statements
Form 1099-R distribution records

Affordable Care Act coverageForm 1095-A, Health Insurance Marketplace Statement
Form 1095-B, Health Coverage
Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
Form 8965, Health Coverage Exemptions
How long you should hang on to records
IF you ...THEN the period is ...
File a return and the next 3 situations below do not apply to you3 years
Do not report income that you should and it is more than 25% of the gross income shown on your return6 years
File a fraudulent returnNo limit
Do not file a returnNo limit
File a claim for credit or refund after you filed your returnLater of 3 years or 2 years after tax was paid
File a claim for a loss from worthless securities7 years

These time frames are for the material used to file your tax return. As for the filing itself, you should hang on to the actual Form 1040 and accompanying schedules and forms forever. This typically is not that much material and, if you prefer, you can convert it to a digital format and keep it stored on your computer, saving trees and space.

Time limit exceptions

Also keep in mind that while the basic IRS review period is 3 years, there are exceptions -- in the tax collector's favor.

If the agency suspects you've underreported your income or has questions about a worthless stock write-off, look out. When examiners believe you've shorted your income amount on a return by 25% or more, they can come asking questions up to 6 years later. Add another 12 months for queries about that bad investment.

Note, too, that if the IRS is convinced you submitted a fraudulent tax return, tax agents can come after you at any time. There is no statute of limitations on bad-faith filings.


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