At the start of a new year, when tax documents are issued, many folks wonder how long they have to keep their old tax records. If you are eager to shred your old records, you should be aware of the IRS rules for what to keep and how long.
The IRS recommends that you keep tax records for three years, unless:
- You did not file a return;
- You filed a fraudulent return; or
- You did not report income that you should have reported.
If you filed a claim for a refund after you filed your return, then you should keep records for three years from the date you originally filed, or two years from the date you paid the tax, whichever is later.
You should keep employment tax records for a least four years after the date the tax was due, or the date the tax was paid, whichever is later.
The IRS also recommends that even if you no longer need your records to tax purposes, you should not discard them until you check to see if you need them for other purposes. For example, if you bought real estate as part of 1031 exchange, you will need to keep the records for both properties until after you dispose of the new property. Also, if you have an insurance claim, or are negotiating with creditors, you may need to keep records longer than the IRS would require. It never hurts to ask before you shred a document that you might need later.
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