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Tax Prep & Filing

How Long Should You Keep Tax Records?

Here's some guidance on what to hang on to and what you can toss.

It’s a good idea to keep your tax returns indefinitely. You can usually toss supporting documents three years after the filing deadline. The IRS generally has to initiate an audit by then. But there are exceptions. Some tax experts recommend holding on to your records for at least seven years.

See Also: 17 Reasons the IRS Will Audit Your Tax Return

Among the most important records to keep for at least three years:

W-2s and 1099s reporting income;

Other 1099s reporting capital gains, dividends or interest;

Form 1098, if you deducted mortgage interest;

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Canceled checks and receipts for charitable contributions.

Among the most important records to keep for longer than three years:

Purchase records for mutual funds and stocks held in taxable accounts to calculate the cost basis;

Records of your home purchase, as well as records of significant home improvements;

8606s showing nondeductible IRA contributions so you can prove you’ve already paid taxes on them.

Read more about when it's safe to toss tax records.

See Also: 9 Surprising Things That Are Taxable