Abstract:
Taxpayers who have filed their 2021
tax returns may be eager to start clearing out some tax-related paper clutter. Paring
down is a good idea, as long as essential records that
may be needed in the event of an IRS audit are kept. Some documents may help with
collecting a future refund or assist taxpayers with filing next year. This
article provides an outline of the documents that should be kept — for how long
— and the papers that can be thrown away.
After filing your taxes, what records can
you toss?
If you’ve filed your 2021 tax return, you may want to do
some spring cleaning, starting with tax-related paper clutter. Paring
down is good. Just be careful to hold onto essential records that may be needed
in the event of an IRS audit. Some documents may be needed to help you collect
a future refund or assist with filing your return next year. Before you start
tossing or shredding documents, read the rules to learn what must be kept — for
how long — and what can be safely discarded.
The
general rules
At
a minimum, you should keep tax records for as long as the IRS can audit your
tax return or assess additional taxes. That’s usually three years after you
file your return. This means you potentially can get rid of most records
related to tax returns for 2018 and earlier years.
However,
the statute of limitations extends to six years for taxpayers who understate
their adjusted gross income by more than 25%. What constitutes an
understatement may go beyond simply not reporting items of income. So, to be
safe, a general rule of thumb is to save tax records for six years from filing.
Keep
some records longer
You
need to hang onto some tax-related records beyond the statute of limitations.
For example:
If you’re still not sure about a specific
document feel free to ask us.
Other
reasons to retain records
Keep
in mind that these are the federal tax record retention guidelines. Your state
and local tax record requirements may differ. In addition, lenders, co-op
boards and other private parties may require you to produce copies of your tax
returns as a condition of lending money, approving a purchase
or otherwise doing business with you. Contact us with questions or concerns
about recordkeeping.
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