How Many Years To Keep Tax Returns?
Tax season is something that most of us dread. But it’s something that must be done each year to ensure that we’re compliant with the laws and regulations of our country. One of the most common questions we get is “How many years do I need to keep my tax returns?” The answer is that it depends on your situation.
How Long Should I Keep My Tax Returns?
The IRS generally recommends that you keep your tax returns for at least three years from the date you filed them. This is because the IRS generally has three years to audit your return and issue a refund or assessment. If you don’t keep your tax returns for at least three years, the IRS could disallow any deductions or credits that you claimed.
What if the IRS Audits Me?
If the IRS audits you, then you’ll need to keep your tax returns for at least seven years. This is because the IRS has up to seven years to assess additional taxes or penalties on you. If you don’t keep your tax returns for at least seven years, then you may be unable to prove that you’ve paid all of your taxes or that you’ve taken all of the deductions and credits that you’re entitled to.
Do I Need to Keep Supporting Documentation?
Yes, you should keep all of your supporting documentation for at least three years. This includes receipts, canceled checks, invoices, and any other documents that support your income, deductions, or credits. This is important because the IRS may request these documents during an audit.
What if I’m Self-Employed?
If you’re self-employed, then you should keep your tax returns and supporting documents for at least seven years. This is because the IRS has up to seven years to assess additional taxes or penalties on you. Keeping your records for at least seven years will ensure that you have evidence to prove your income and deductions.
What If I’m a Business Owner?
If you’re a business owner, then you should keep your tax returns and supporting documents for at least seven years. This is because the IRS has up to seven years to assess additional taxes or penalties on your business. Keeping your records for at least seven years will ensure that you have evidence to prove your income and deductions.
What if I’m a Real Estate Investor?
If you’re a real estate investor, then you should keep your tax returns and supporting documents for at least seven years. This is because the IRS has up to seven years to assess additional taxes or penalties on your investments. Keeping your records for at least seven years will ensure that you have evidence to prove your income and deductions.
Are There Any Exceptions?
Yes, there are some exceptions. For example, if you have foreign income, then you should keep your tax returns and supporting documents for at least six years. This is because the IRS has up to six years to assess additional taxes or penalties on your foreign income. Also, if you’ve underreported your income by more than 25%, then you should keep your tax returns and supporting documents for at least six years.
Conclusion
In conclusion, the answer to the question “How many years do I need to keep my tax returns?” is that it depends on your situation. Generally, you should keep your tax returns and supporting documents for at least three years. But if you’re self-employed, a business owner, or a real estate investor, then you should keep your tax returns and supporting documents for at least seven years. Also, if you have foreign income or you’ve underreported your income by more than 25%, then you should keep your tax returns and supporting documents for at least six years.