The deadline for individual taxpayers who extended their 2019 tax returns was October 15th, and the original deadline was on July 15th—both were extended due to COVID-19. Once you finish filing last year’s return, it’s normal to wonder which records you can throw away. Here’s what you must keep, and what you can discard.
General guidelines
Keep tax records for the period during which the IRS can audit your tax return or assess additional taxes—typically three years after you file your return. You can likely get rid of records related to 2016 and earlier years.
The statute of limitations is six years, however, for taxpayers who understate their adjusted gross income by more than 25%. What constitutes an understatement can be complex, so it is a good idea to save tax records for six years from filing to be safe.
What to keep longer
The records you must keep beyond the statute of limitations include
- The tax returns themselves indefinitely. This lets you prove that you actually filed. There’s no statute of limitations if you filed a fraudulent return or failed to file at all.
- W-2 form. These should be kept until you begin receiving Social Security benefits in case questions arise regarding your earnings.
- Records related to real estate or investments should be kept while you own the assets and for three to six years after selling, depending on how conservative you want to be.
- Retirement account records should be kept for three to six years after the accounts are empty and the last withdrawal has been reported.
Additional reasons to keep records
The guidelines listed here are federal. Your state and local rules may differ, and lenders and other private parties can also ask to see tax returns before doing business with you.
If you have any questions about recordkeeping, reach out. We’re always here to help.