Taxpayers must keep records for as long as they are needed to administer any provision of the Internal Revenue Code. In most cases, this means keeping documents that support items reported on a tax return until the period of limitations expires. (“A taxpayer must keep records as long as needed… until the period of limitations… expires.”)
The period of limitations determines how long a taxpayer may amend a return or how long the IRS may assess additional tax.
General Recordkeeping Period
For most returns, the period of limitations is three years from the date the return is filed. Returns filed early are treated as filed on the due date. (“This is generally 3 years… returns filed before the due date are treated as filed on the due date.”)
Property Records
Records related to property must be kept until the period of limitations expires for the year the property is sold. If property is received in a nontaxable exchange, the taxpayer must keep records for the original property until the replacement property is sold. These records are needed to determine:
- Depreciation
- Amortization
- Depletion
- Basis for gain or loss (“A taxpayer must keep records relating to property until… they sell the property.”)
Employment Tax Records
Taxpayers with employees must keep all employment tax records for at least four years after the tax becomes due or is paid, whichever is later. (“A taxpayer with employees must keep all employment tax records for at least 4 years…”)
Period of Limitations Summary
| If you… | Then the period is… |
|---|---|
| 1. Owe additional tax (no other exceptions apply) | 3 years |
| 2. Omit income >25% of gross income on the return | 6 years |
| 3. File a fraudulent return | No limit |
| 4. Do not file a return | No limit |
| 5. File a claim for credit/refund after filing | Later of 3 years or 2 years after tax was paid |
| 6. Claim a loss from bad debt or worthless securities | 7 years |
(“Period of Limitations… 3 years… 6 years… no limit… 7 years.”)
Practical Recordkeeping Guidance
Taxpayers should maintain both basic and specific records even when not required. For example, keeping a Form W‑2 until Social Security benefits begin can help resolve questions about earnings history. (“A taxpayer who receives a Form W‑2 should keep a copy until they begin receiving Social Security benefits.”)
The IRS does not require a specific recordkeeping format. Computerized systems are acceptable if they can produce legible records that support tax liability. Taxpayers must keep:
- Proof of payments
- Receipts
- Statements
-
Any documents supporting amounts reported on the return (“The IRS does not require taxpayers to maintain records in a particular way… must be able to produce legible records…”)