Generally, taxpayers should hold on to their tax records for at least three (3) years after the due date of the return to which those records apply. However, if the original return was filed later than the due date, including if the taxpayer received an extension, the actual filing date is substituted for the due date. A few other circumstances can require taxpayers to keep these records for longer than three years.
The statute of limitations in many states is one year longer than in the federal statute. This is because the IRS provides state tax authorities with federal audit results. The extra year gives the states adequate time to assess taxes based on any federal tax adjustments.
In addition to the potential confusion caused by the state statutes, the federal three-year rule has a number of exceptions that cloud the recordkeeping issue:
If none of these exceptions apply to you, then for federal purposes, you can probably discard most of your tax records that are more than three years old; however, you may need to add a year or more if you live in a state with a statute of longer duration.
Important note: Although you can discard backup records, do not throw away the filed copies of any tax returns or W-2s. Often, these returns provide data that can be used in future tax-return calculations or to prove the amounts of property transactions, social security benefits, and so on. You should also keep certain records for longer than three years:
Tax return copies from prior years are also helpful for the following:
Taxpayers who have misplaced a copy of a prior year’s return can order a tax transcript from the IRS. This transcript summarizes the return information and includes AGI. This service is free and is available for the most current tax year once the IRS has processed the return. These transcripts are also available for the past 6 years' returns. When ordering a transcript, always plan ahead, as online and phone orders typically take 5 to 10 days to fulfill. Mail orders of transcripts can take 30 days (75 days for full tax returns). There are three ways to order a transcript:
Those who need an actual copy of a tax return can get one for the current tax year and for as far back as 6 years. The fee is $50 per copy. Complete Form 4506 to request a copy of a tax return and mail that form to the appropriate IRS office (which is listed on the form).
If you have questions about which records you should retain and which ones you can dispose of, please give this office a call.