Keeping tax records is the most frequent question I get, especially around tax time. Everyone wants to know “how long do I have to keep my tax records?”
Unfortunately that answer is not an easy one. Of course, it’s the IRS!!
The length of time you need to keep your records depends on the type of records you have.
What I am going to do is list the most common types of records and let you be the judge.
The basic rules for keeping tax records are these:
You have income you earn from a job, regular expenses, nothing complicated – keep tax records 3 years.
You have income from a business that you run. – keep tax records 7 years.
There you have it, the basic rules. However, since the IRS likes to mess with us they have thrown a few caveats in just to keep us guessing.
These caveats depend on the type of income and expense you may have.
Personal Tax Records
For personal income here are some of the exceptions:
Business Tax Records
For business records I recommend you keep them for a minimum of 7 years. If you have had any sort of strange transaction, IRS audit, etc. ask your tax adviser how long you should keep them.
Sorry this advice is so short, but it is better safe than sorry when it come to the IRS.
What is the bottom line?
The Bottom Line
So what is the bottom line on this? You are looking for information on how long to keep tax records. Well, let me tell you what I do.
When you finish your tax return each year, scan it. You can go to a copy center (like FedEx) or office supply store (Staples) and get it scanned if you do not have the ability to scan it yourself. In addition scan the backup documentation. See Record Retention Requirements for more information on keeping tax records. and for more information on the backup records you should keep.
Have the store save the scan on a flash drive. You can get rid of the originals, but be sure to keep all the backup. I keep all my files for 10 years. It’s easy once it is scanned, it takes up no space!!
As far as keeping tax records if the IRS hasn’t come knocking in 10 years, chances are they won’t. After 10 years you can delete the file.
Here is a downloadable guideline on keeping tax records and the types of files that will prove income and expense.
Read testimonials from satisfied users of Easy-PIM. Leave your comment on how this has helped you and your family here.
Subscribe to our E-Zine. I will keep you up to date on things you should know about your Personal and Financial Records. I mean, you do want to know, don't you?
Make your organizing quick and easy with the Easy-PIM Workbook Series. Order NOW!