How long should you keep your tax returns and supporting documents?Articles
In general, the IRS has three years from the due date of the return or the date on which the return was filed, whichever is later, to audit and adjust the return. However, the IRS has six years to audit a return if a person fails to report over 25% of gross income. If a return is not filed, or a fraudulent return has been filed, the IRS can audit records for that tax year at any time.
For tax returns and forms W-2, we recommend keeping them at least 7 years or permanently if you could. Your tax returns provide support in case the IRS contends you did not file a return or filed a fraudulent return. Keep forms W-2 in case you need to prove earnings or Social Security and Medicare contribution to Social Security Administration many years later.
For documents that has future tax relevance such as cost of stocks purchased, IRA contributions, closing documents of your houses, improvement costs of the houses etc., you will need these documents to calculate gains or losses when you sell these assets. We recommend keeping these documents at least 4 years after you sell and report the sold assets on your tax return.
In conclusion, how long you should keep your tax records depends on the future tax relevance of the documents
For more information, please contact Dao CPA, P.C.