How Long Should You Keep Tax Records?

Amherst Resident Looking to Spring Clean

According to the IRS, federal tax returns should be kept a minimum of three years.  The IRS only has three years to assess additional taxes, and taxpayers have three years to make additional claims.  Investment forms, such as retirement documents, should be kept at least seven years.  Bank statements and pay stubs should be kept for two years or more.

Looking to spring clean her files, a resident in Amherst, NH contacted Merrimack Tax Associates seeking advice for how long she should hold on to her tax documents.

Keep the Documents in Case of Additional Assessments

The IRS can legally go back three years to require additional tax payments, making it vital that your tax documents are kept for a minimum of that time.  However, if you have underreported any federal taxes, you will need to keep these mis-filed documents forever, in addition to the past six years of filings.  If as tax return was filed fraudulently or incorrectly, the IRS has the legal right to review these.  If you have not filed a tax return for a particular year, the supporting documents that you have for that unclaimed year should be kept forever. 

Documents showing Interest and taxes paid on investment accounts should be kept for at least seven years.  This is how far the IRS may need to go back to determine that the correct taxes were paid, compared to what was owed.

When in Doubt, Keep Your Records

There are many factors that can affect the need for your tax and financial documentation.  When in doubt, hold on to the documentation filing it away in a convenient location.  It is better to have it and not need it, than to have the IRS request a document that you cannot locate.

The Amherst resident took our advice to heart.  Instead of throwing out her paperwork, she has put that effort into creating an effective filing system.  This way she can be sure that she has all of her documentation should the need ever arise.