When Can You Dump Old Tax Records? (2024)

FAQs

What year tax returns can I destroy? ›

Normally, you should keep these tax records for three years. It's a good idea to keep some documents longer, such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property documentation.

State Tax Documents Retention Requirements

For example, I live in Los Angeles, where the California Franchise Tax Board has up to four years to audit state income tax returns. With that timeframe, California residents should keep their state tax records for at least four years.

Generally, the IRS can include returns filed within the last three years in an audit. If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years. The IRS tries to audit tax returns as soon as possible after they are filed.

KEEP 3 TO 7 YEARS

Knowing that, a good rule of thumb is to save any document that verifies information on your tax return—including Forms W-2 and 1099, bank and brokerage statements, tuition payments and charitable donation receipts—for three to seven years.

The IRS statute of limitations for an audit is six years, though there are tax issues for which there is no statute of limitations. For instance, if you fail to file Form 3520, relating to foreign income or inheritances or gifts over $100,000, there is no time limit for an audit.

6 years - If you don't report income that you should have reported, and it's more than 25% of the gross income shown on the return, or it's attributable to foreign financial assets and is more than $5,000, the time to assess tax is 6 years from the date you filed the return.

If you do decide to get rid of tax documents, make sure to shred them. Tax returns contain sensitive information that identity thieves love.

State Tax Record Retention Requirements

For example, I live in Los Angeles where the California Franchise Tax Board has up to four years to audit state income tax returns. With that timeframe, California residents should keep their state tax records for at least four years.

In some cases, the IRS can take more than 10 years to collect tax debts. This happens when an event causes the clock to stop ticking on the statute of limitations and the deadline gets extended. This is called tolling the statute of limitations.

Yes, after 10 years, the IRS forgives tax debt.

However, it is important to note that there are certain circ*mstances, such as bankruptcy or certain collection activities, which may extend the statute of limitations.

Who gets audited by the IRS the most? ›

The two groups most likely to get audited are those earning more than $10 million and taxpayers who claim the Earned Income Tax Credit, who tend to be low- or middle-income workers.

Keep for a year or less – unless you are deducting an expense on your tax return: Monthly utility/cable/phone bills: Discard these once you know everything is correct. Credit card statements: Just like your monthly bills, you can discard these once you know everything is correct.

Keep For 30 Days Or Less

Utility bills and phone bills can be shredded after you've paid them unless they contain tax-deductible expenses.

Hold onto bank statements and canceled checks for at least a couple of years, as well as student loan statements and investment statements. For tax returns and supporting statements, shredding them after at least three years should be fine.

The IRS recommends keeping returns and other tax documents for three years—or two years from when you paid the tax, whichever is later. The IRS has a statute of limitations on conducting audits, and it's limited to three years.

Individual tax returns (the Form 1040 series) are temporary records which are eligible to be destroyed six (6) years after the end of the processing year, unless extended due to an Open Balance Due - Collection Statute Expiration Date.