The period of time you have to keep records is a function of
the period of limitations for the items you are claiming. The period of limitations is the
time frame in which you can amend your return or the IRS can assess additional taxes. Once
the period of limitations has expired, the IRS lacks the statutory power to challenge your
return.
The following table details the typical length of time you must
keep certain records. "Years" refers to the period beginning after the return
was filed. Returns filed before the due date are treated as being filed on the due date.
| Tax item |
Time |
| Previous tax returns |
5 years (Some authorities advise keeping them for six years, since in some cases where
income has not been reported, the IRS may go back as far as six years to question a tax
return.) |
| Income that was not reported that accounts for more than 25% of the gross income on
your return |
7 years |
| A fraudulent return |
No limit |
| A return that was not filed |
No limit |
| A claim for credit or refund filed after you've already filed a return |
Either 3 years after filing or 2 years after tax was paid, whichever is longer. |
| A claim for loss from worthless securities |
7 years |
| Canceled checks |
1 year for all checks and 7 years for ones that may be needed as verification to IRS |
Some records you may want to keep forever. Remember that the
chart above is based on when the item appears on your tax return. Many items might not
appear on your tax return until years after the expenditure. For example, mutual funds you
buy today might not be sold until 10 years later. You need the cost basis of today's
acquisition, therefore, for at least 13 years (three years after it appears on your
return).
