We get this question all the time at ClarkSilva, and for good reason. It’s tempting to toss old tax returns that no longer seem relevant. But which can go? And, are you opening yourself up to issues down the road by doing so?
A good base rule is to save tax records for the past six years of filing. Technically, you should keep tax records for as long as the IRS has the ability to audit your tax return or assess additional taxes, generally three years after you file. At the same time, the statute of limitations extends to six years for taxpayers who understate their adjusted gross income (AGI) by more than 25%. So we advise six years of record-keeping, just to be safe.
Even still, it’s a smart idea to hang onto tax records beyond the statute of limitations. For example, one good reason to keep tax returns indefinitely is to prove to the IRS that you actually filed a legitimate return (no statute of limitations for an audit if you didn’t file a return or if you filed a fraudulent one!) Another reason might be your W-2 forms, in case questions arise about your work record or earnings for a particular year.
Looking to declutter, but need some reassurance? ClarkSilva can advise you on what to store safely, and what can go in the shredder.