The following is a guest post by Jim Young.
Ever wonder how long you really need to hold on to your tax documents? Depending on which expert you ask, you might get a range of responses ranging from a few years to a lifetime.
IRS Publication 552 gives you a direct answer and says that you are required to keep records as long as they may be needed for the administration of any provision of the Internal Revenue Code. This means you should keep records that support items on your tax return until the period of limitations- the time that you can amend your return or be assessed by the IRS - runs out.
IRS Publication 552 says if you:
- Owe additional tax and Nos. (2), (3) and (4 ) do not apply to you, the limitation is - 3 years.
- Do not report income that you should and it is more than 25 percent of the gross income shown on your return - 6 years.
- File a fraudulent return- No limit.
- Do not file a return - No limit.
- File a claim for a credit or refund after you filed a return - the later of 3 years or 2 years after the tax was paid.
- File a claim for a loss from worthless securities - 7 years.
The space required to store tax returns and supporting documents is minimal. You can probably retain 20 years of returns in one of the inexpensive snap-top plastic containers and store it in a closet, attic, or basement in the event the IRS comes calling.
Jim Young has volunteered with AARP Foundation Tax-Aide since 2002 in Henrico, Va., after retiring from a career in financial management. He is an Enrolled Agent (a person certified by the IRS as qualified to represent taxpayers in dealings with the agency) and is a member of the National Association of Enrolled Agents. AARP Foundation provides tax counseling as a public service through the AARP Foundation Tax-Aide Program. The information provided is for educational purposes only and may not apply to your tax situation. Your taxes are your responsibility.