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Tax Record Retention: Your Guide to Keeping Tax Documents
Tax record retention periods vary from three years for certain income tax returns to indefinitely.
If the Internal Revenue Service audits your business or you need to adjust a return, it’s vital to have complete, accurate documents. Failure to keep records could increase your taxes owed substantially and, in some cases, result in penalties.
Read on to explore IRS rules and best practices for retaining tax records and supporting documents.
IRS rules for tax record retention
According to the IRS, auditors generally “include returns filed within the last three years in an audit.” That means you should retain records for three years after filing the return.
How long should you keep your tax records in case of an audit
However, the agency leaves the actual period fairly vague. It said, “If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years.” So how long should you keep tax documents?
The IRS provides the following guidelines for tax record retention:
- If you file for a bad debt deduction or loss from worthless
- how many years should you keep business records
- how many years do you keep business records