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How long should you keep tax records?

 

Suggested Holding Periods for Tax Records:

1. It is a good policy to save copies of your 1040 and supporting schedules for 5 years.

2. The IRS requires record retention as long as they are important for Federal Tax law. Generally this means:

* 3 years from the date the return is filed...or
* 2 years from the tax payment date...or
* 6 years, if income is under-reported by more than 25%
(whichever is later)

3. Keep ALL--bank statements, checks, receipts and other financial records for at least three years, especially those documents that will support your tax return figures.

4. HOLD INDEFINITELY

* All papers and receipts that deal with any purchase, sale and major improvement of your current and all previous principal residences.

* All IRA records, investment purchases and sales, and 1040 returns filed for each year.