How long to keep tax records

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PlicketyCat's picture
PlicketyCat
Status: Platinum Member (Offline)
Joined: Feb 26 2009
Posts: 680
How long to keep tax records

OK ya'll, I'm trying to pack and am purging all sorts of stuff to reduce the amount of boxes and useless crap we have to move.  One thing that I'm wondering about is how long to keep my tax records.  Yes, I actually have every tax return and all the supporting documents algoing back to my first job in 1985. I read through the SSA guidelines, and really they're as clear as mud.  "Keep them for 3 years" unless "you have unreported income" or "filed a fraudulent claim" in which case, keep them forever.... ummmm OK, well they're the ones who will determine whether you didn't claim or claimed fraudulently. The IRS can audit you for up to 6 years, so I would assume that "indefinitely" really means 6 years... or am I missing something?

And what if you were self-employed? They say to hold on to business records forever, too.... but what if the "business" was just sole-proprietorship (meaning it was filed on a personal return not a business return)? What if the business has been defunct for years? Does it change any of the timelines if you claimed a (substantial) business loss on your personal return? I don't own any of the "business assets" anymore, etc etc.

And then they say don't get rid of your tax returns as long as you still own any assets that were claimed. Oh christ... does that mean that as long as I still have the Mutual Fund I set up after graduation that I have to keep my tax records since '89?  Same thing for my house... do I have to keep everything from the minute I started claiming mortgage interest?

I haven't intentionally done anything wrong and paid a CPA to do my taxes and such, but tax law is so screwed up that you can easily do something "illegal" accidentally. I just know the minute I shred something Murphy's Law will send the Taxman to come f#%k up my life. But, conversely, if you have kept everything and something in there is "damning evidence" then the IRS can use it against you. If you don't have the supporting docs and they don't have the supporting docs... they can't prove anything and can't make you pay for whatever trumped up thing they think you did (or didn't do), Right? Or are you "guilty until proven innocent" when it comes to the IRS?

So what do you all think? Keep them only 3 years? Keep them 6 years? Keep them 10 years (i.e. 2000 forward)? Keep everything forever and ever no matter how much space it takes up?

jerrydon10's picture
jerrydon10
Status: Gold Member (Offline)
Joined: Mar 2 2009
Posts: 442
Re: How long to keep tax records

You are guilty until proven innocent. Keep IRS records forever. These thugs may decide to come for you one day. Other records? The standard seems to be about 3 years.

suesullivan's picture
suesullivan
Status: Gold Member (Offline)
Joined: Oct 6 2008
Posts: 305
Re: How long to keep tax records

I read once, god knows where, seven years on tax returns. I also have w-2 and tax forms going back to 1985. thank goodness I do. I actually had to use them to prove to the Social Security Administration all my earned income since college, when I discovered that my parents had never obtained a social security number for me as a child and had mistakenly told me that my paternal grandmother's SSN was mine. I'd grown up giving that number out to employers and noone ever asked to see an SS card. I got audited when I was about 30, with the IRS threatening fines over unreported railroad retirement income. What a surreal chapter that was...

So, you never know what might happen, and being self-employed, you are more likely to be audited, I believe...

PlicketyCat's picture
PlicketyCat
Status: Platinum Member (Offline)
Joined: Feb 26 2009
Posts: 680
Re: How long to keep tax records

OK - my CPA called me back (fast for a change - probably because it's not tax-time)

She said to keep:

  • Tax Returns (the actual 1040 Forms & any Schedules) = Forever
  • Tax Records (W2*~, 1099, Bills, Receipts, Invoices, etc) = 7 years** from date filed   (i.e. 2000 return, filed 4/01, keep until 4/08)
  • Social Security Statements = Forever/until you begin receiving benefits 

*~ keep Copy C of your W2 until you get your first Social Security Statement. If the statement is correct, you can discard all but the most recent 7 years.

** if these records contain information/statement regarding your house, other appreciable assets you still own (including investments), or pensions/retirement accounts you should detach them from the return and file them with other documents related to that asset until you no longer own that asset.

PlicketyCat's picture
PlicketyCat
Status: Platinum Member (Offline)
Joined: Feb 26 2009
Posts: 680
Re: How long to keep tax records

Woah - amazing the weird crap you find when you look at records from 25 years ago!  My handwriting used to suck, that's for sure!  Surprisingly, I found 4 separate instances where the feds or the state actually corrected my return and refunded me even more money... even once where they ended up owing me instead of me owing them. Incredible!  And I found a few W-2s that I have no idea what job they were for... I guess the business I worked at was owned by some larger corporation which sent out the statements. Even found some gas receipts when it was only $1 a gallon... flashbacks!

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