How Long Should You Keep Your Tax Information?

How Long Should You Keep Your Tax Information?

05/4/2022 Tags: Announcements

Ever wondered how long you should keep your income tax records, property sale information, stock investment documents, or other tax info?

The short answer? It depends.

Longer answer? It doesn’t hurt to hold on to some pieces of tax information indefinitely.

The IRS spells out the specifics that apply to income tax returns, records related to property, and other records. Below we hit some of the highlights.

As a general rule, keep your tax returns indefinitely. Hold on to the supporting documentation for six years. Usually, the IRS can only assess tax within three years after filing your return.

You can’t be completely sure the IRS won’t try to assess tax. However, hanging on to your tax returns indefinitely and your important records for six years after you filed the return should be adequate. If you file electronically, the company that prepared and filed your return has to provide you with a copy of the return. Be sure to keep that copy.

Keep records related to property you own for longer. For example, if you sell property this year, the tax consequences may depend on something that happened years ago.

If you make a profit on property you sell, you might owe capital gains tax on that profit. Calculating that tax amount means you need to keep your records as long as you own your investment. You'll need those records to calculate the cost basis for the property. The cost basis is the actual cost — adjusted up or down — and includes other factors, like any major improvements you made.

If separation or divorce could be in your future, make sure you have access to any tax records your spouse is keeping that could affect you. Your records should include a copy of the divorce decree or agreement of separate maintenance. You’ll also want any agreements or decrees related to custody of your kids and who can claim them as dependents.

If you’re worried about keeping track of too much paper, the good news is that you can keep your records electronically. Just make sure to keep everything backed up.

If you have other questions about your taxes, please let us know.

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