You’ve recommended that people keep tax returns for life. Why keep them so long if you can be audited only for three years? Can you get your returns from the IRS if you’ve already tossed them?
You’re right that the IRS generally has just three years after the due date of your return to initiate an audit (up to six if you failed to report more than 20% of your income). After that, you can safely toss most of your supporting documents. But there are plenty of reasons to keep your tax returns indefinitely and no reason not to; just keep a digital archive and toss the paper.
You may need your returns to establish the cost basis of investments, to contest an error on your Social Security benefits statement, or to show depreciation taken for a home office, rental property or business equipment; you may also need the returns when you apply for a mortgage or disability insurance. Bill Nemeth, an enrolled agent in Atlanta who is licensed by the IRS to assist taxpayers, has used tax returns from as far back as the 1980s to help clients during audits. He recently used old tax returns to help provide evidence for a victim of tax identity theft.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Another reason to keep your returns: You can order tax returns from the IRS for only the past six years, and they cost $57 each (see Form 4506 to order the old returns). You can order your tax transcript from the IRS for the past three years free (enrolled agents and other professionals may be able to access them faster and further back), but Nemeth says the transcript doesn’t always go into enough detail to provide what you need. See How You Can Get Prior Year Tax Information from the IRS for more information. You can find an enrolled agent at the National Association of Enrolled Agents Web site.
For more information about records to keep and toss, see Declutter Your Life. Also see the IRS’s Recordkeeping for Individuals.
-
AI Stocks Lead Nasdaq's 398-Point Nosedive: Stock Market TodayThe major stock market indexes do not yet reflect the bullish tendencies of sector rotation and broadening participation.
-
Top Tech Gifts to Grab at Walmart Before ChristmasBig savings on Apple, Bose, HP, Vizio and more while there's still time to shop.
-
AI Appliances Aren’t Exciting Buyers…YetThe Kiplinger Letter Artificial intelligence is being embedded into all sorts of appliances. Now sellers need to get customers to care about AI-powered laundry.
-
It’s Not Too Late to Boost Retirement Savings for 2018retirement Some retirement accounts will accept contributions for 2018 up until the April tax deadline.
-
How to Correct a Mistake on Your RMDs from IRAsretirement If you didn't take out the correct required minimum distribution because your brokerage firm made a mistake, the IRS may show some leniency.
-
Ways to Spend Your Flexible Spending Account Money by March 15 Deadline
spending Many workers will be hitting the drugstore in the next few days to use up leftover flexible spending account money from 2018 so they don’t lose it.
-
Making the Most of a Health Savings Account Once You Turn Age 65
Making Your Money Last You’ll face a stiff penalty and taxes if you tap your health savings account for non-medical expenses before the age of 65. After that, the rules change.
-
Reporting Charitable IRA Distributions on Tax Returns Can Be Confusing
IRAs Taxpayers need to be careful when reporting charitable gifts from their IRA on their tax returns, or they may end up overpaying Uncle Sam.
-
When You Can Expect to Receive Your Tax Refund
taxes The quickest way to receive your tax refund is to file electronically and have the money directly deposited into your bank account.
-
How a Move Can Change Your 529 Plan Tax Deduction
529 Plans The tax deduction you get for contributing to your state’s 529 plan can disappear if you move to another state.
-
Tap an IRA Tax-Free With an HSA Rollover
IRAs You can convert tax-deferred money in a traditional IRA into tax-free cash by rolling it over to a health savings account and using it to pay for medical bills.
