How Long to Keep Tax Records (and Exactly What to Keep)

How long to keep tax records guide by Robert Allen Bautista, Kansas City tax preparer

"How long do I have to keep this?" is one of the most common questions I get, usually from someone holding a shoebox of receipts. The answer depends on how long the IRS has to question a return. Here is the practical version.

The time limits

  • 3 years from the date you filed (or the due date, if later): the general rule for most returns.
  • 6 years if you left out more than 25% of the gross income you should have reported.
  • 7 years if you claim a loss from worthless securities or a bad debt deduction.
  • Indefinitely if you never filed a return or filed a fraudulent one.
  • 4 years for employment tax records if you have employees, from the date the tax was due or paid, whichever is later.

Records that follow the asset, not the year

Keep records for property (your home, rental property, equipment, investments) until the time limit expires for the year you sell or dispose of it. That means purchase documents, improvements and depreciation records can need to be kept for many years. Home improvement receipts, for example, can reduce the taxable gain when you sell.

What small business owners should keep

  • Bank and credit card statements for business accounts
  • Receipts and invoices for expenses, especially travel, meals, gifts and vehicle costs
  • Mileage logs
  • 1099s received and issued, and W-9s from contractors
  • Payroll records, if you have employees
  • Asset purchase records and depreciation schedules
  • Copies of filed returns (keep these permanently; they cost nothing to store digitally)

Paper or digital?

Digital copies are generally acceptable if they are legible and complete. Scan receipts monthly, name files consistently (date, vendor, amount), and keep a backup in a second location.

A simple system

  1. One folder per tax year, with subfolders for income, expenses, assets and the filed return.
  2. A separate permanent folder for property and asset records.
  3. Each January, check which years have passed their time limit and shred what you no longer need, except permanent records.

Official IRS sources

This article is general information, not tax advice for your specific situation.

Related guides

About the author

Robert Allen Bautista is a tax preparer and accountant in Kansas City. He spent four years at PwC in IT audit and tax, served as Chief Accountant at a CPA firm, holds an M.S. in Accounting, and is a CPA candidate. He has worked with 350-plus individual and small business clients and writes plain-English tax guides in English and Spanish. More about Robert · Website · LinkedIn 

Comments

Post a Comment

Popular posts from this blog

How Self-Employment Tax Works, Step by Step (2026)

Image
If you freelance, drive for an app, or run a one-person business, the tax that surprises people most is not income tax. It is self-employment tax , the Social Security and Medicare tax that an employer would normally split with you. When you work for yourself, you pay both halves. Here is exactly how it is calculated, step by step. Step 1: Figure your net profit Self-employment tax is based on net earnings, not gross revenue. Start with what you were paid, then subtract ordinary and necessary business expenses on Schedule C (or your share of partnership income on Schedule K-1). Every legitimate expense you record lowers both income tax and self-employment tax. Step 2: Multiply by 92.35% You do not pay the tax on 100% of profit. The IRS lets you multiply net profit by 92.35% first. This mirrors the fact that employees do not pay Social Security and Medicare on the employer's share. If net earnings after this step are under $400, you generally owe no self-employment tax. Step ...
Read more

Living in Kansas, Working in Missouri (or the Reverse): State Tax Basics

Image
In the Kansas City metro, thousands of people sleep in one state and work in the other. That usually means filing two state returns. The good news: the system is designed so you are not taxed twice on the same income. Here is how it works. The core rule Your home state taxes all of your income , wherever you earn it. The state where you work taxes the income earned there , as a nonresident. Your home state gives you a credit for the tax you paid to the work state, so the same dollars are not fully taxed twice. Kansas and Missouri do not have a reciprocity agreement, so you generally cannot just file in your home state and skip the other one. Live in Kansas, work in Missouri Missouri nonresident return (Form MO-1040 with the nonresident section) reporting the wages earned in Missouri. Your employer will usually withhold Missouri tax. Kansas resident return (Form K-40) reporting all of your income, then claiming the credit for taxes paid to other states for the Missouri tax. Kansas C...
Read more