How long do I keep tax returns?

[ripvanwinkle]

I decided to do some file cabinet cleaning. How long do I have to keep my tax returns? I have some going back to 1995. I've read 7 yrs or before is a good place to start cleaning. These are personal returns and no business associated with it. It also has joint returns with my ex-wife.

[taxref]

Since you did not have any business activity on the returns, the answer becomes easier.  Under normal circumstances, you can be audited for up to 3 years after the due date of a return.  If you filed later than the due date, it is up to 3 years after the date of filing.

For example, your 2008 tax return was due on 4-15-09.  If you filed on or before that date, the statue of limitations would have expired on 4-15-12.  Consequently, you are probably safe disposing of all your returns prior to 2010 (again, assuming you filed on time).  You would be safe disposing of the 2010 return on 4-16-14.

Note that the statute can be longer, under certain extreme conditions.  If one is accused of severely under reporting their income, the statute of limitations becomes 6 years.  In the case of not filing, or filing a fraudulent return, there is no time limit.  

[TheOtherMe]

Also watch the statute of limitations for the state in which you live.  Where I live, it is one year later than the federal statute of limitations so they can get any adjustments from the IRS.  

When I worked at the IRS, we advised people without businesses to keep returns and the information for four years for that reason, business returns for 7 years.  

If you have committed fraud, there is no statute of limitations in the code.  Practically speaking, the IRS generally does not go back to the beginning of time.  

[grits]

You should always keep a copy of your tax return. The reason for it is to prove that you did file. You don't always have to keep the accompanying paperwork but you need to keep the return itself.

[mwcpa]

Keeping your tax returns for at least 3 years from the original due date if filed 'on time' or actual filing date if filed after the original due date is the general rule of thumb, noted previously.

I often tell my clients to keep at least a copy of the tax filings for as long as they can reasonably store them (and in this day and age one can keep this all electronically on a flash drive or on ones computer - encrypted as much as possible, at minimum a password protected file).  The underlying data (other than matters of material significance or is permanent in nature, which should be maintained much longer, generally three years after the filing of the return that discloses the disposition of the matter)

Things that should be maintained longer...
Proof of cost basis of securities (including reinvested dividends)
Proof of contributions to an IRA, Roth IRA, non deductible IRA.  In a state like NJ, IRA distributions can be partially tax free (NJ does not allow for a deduction for an IRA).
Purchase of a home documents and proof of any improvements made to that home.
There are other matters that should be considered to hold longer.

[ripvanwinkle]

Thanks all. That helps.

[ՏՇԾԵԵʅՏɧ_LԹՏՏʅҼ]

I was always advised to hang onto returns for 7 yrs.

[Deleted]

How long does one keep tax returns for deceased parents? I have both parents tax paperwork, as executrix for one, other had no property/estate except for a cat. I got that, , so really didn't matter. Father has been deceased for 10 years and mother for 2. Mother hadn't  filed returns for the last 3-4 years of her life as she was living on Social Security and had bupkus to report.

Also, how long do I have to keep mortgage payment stubs for a property that we no longer own? We sold it in May of this year but I have all the monthly payment stubs and tax bills from the 8 years that we owned it. Mortgage on new house is a coupon book so I won't have to worry about it for that.

Thank you.

[mwcpa]

"How long does one keep tax returns for deceased parents?"

"Father has been deceased for 10 years "

Tax data and returns should be maintained for up to 3 years after the date the estate tax filings were submitted or date of passing, which ever is longer (assuming no estate tax filings were required).

Data that relates to the fair value of assets on the date of passing, if any, should be maintained until the asset three years after the asset is sold and reported on a tax filing.  Example:  Dad passes in 2007, an asset, 100 shares of XYZ stock was worth 1,000, and we cannot determine what he paid for it.  In 2013, with the stock now worth 10,000 I sell it.  I need to maintain the details supporting the 1,000 as that is my basis (cost) in the XYZ until 2017 (if my tax filing is submitted on or before April 15 2014 then + 3 years is April 15, 2017)

"Mother hadn't filed returns for the last 3-4 years of her life as she was living on Social Security and had bupkus to report."

You may want to maintain the last 3 years of records, so as of today, December 11, 2013, data for 2013, 2012, 2011 and 2010.  (2010 was required to be filed in 2011 + 3 years would be 2014)

"Also, how long do I have to keep mortgage payment stubs for a property that we no longer own"

You should keep the "1098" and annual loan statements (if any) for at least 3 years after the tax return is filed.  The IRS has been "auditing" many who have mortgages over 1,000,000 for the last few years, they are asking for proof of payments, proof of the original loan, proof of current years balances (and a computation of the average loan balance), etc.

"tax bills from the 8 years that we owned it"

the real estate tax bills and proof of payment should be maintained for at least 3 years after the income tax return is filed, just like any other income tax record.

Remember, an income tax return can generally be reviewed (audited) by the IRS for up to 3 years after it is filed.  All deduction, credits, income, etc records are required to be maintained by you.  It is not up to the IRS to disprove your deductions and credits, it is up to you to prove you incurred them.  Some states have longer review (audit) periods.  Be aware of when the tax return was filed.... I always add four to the year of the data to be safe (and wait until April 15, or the date filed, which ever is later)

I often recommend to clients that they maintain tax returns for as long as they can and the underlying current year data for upwards of four.

[Deleted]

Thank you very much mwcpa. I appreciate it. Guess everything stays in the closet for now then.

[Gardening Grandma]

I keep paper returns for 7 years.  Older returns have been scanned and saved on a DVD.  I have returns going back to the 90's on one DVD.

Now that Turbotax lets me save my return as a pdf file, I don't even have to scan them anymore.