Advertisement
taxes

Don’t Toss Your Tax Returns

There are good reasons to keep returns for life, even after the threat of an IRS audit is over.

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.

Advertisement - Article continues below

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.

Advertisement
Advertisement - Article continues below

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.

Advertisement

Most Popular

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)
tax deadline

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)

Between due dates for IRA or HSA contributions, paying estimated taxes and other deadlines, there's more to do by July 15 than just filing your federa…
July 10, 2020
65 Best Dividend Stocks You Can Count On
stocks

65 Best Dividend Stocks You Can Count On

These 65 Dividend Aristocrats are an elite group of dividend stocks that have reliably increased their annual payouts every year for at least a quarte…
July 8, 2020
Know Why Your Credit Score Changes: 9 Money Moves to Consider
credit & debt

Know Why Your Credit Score Changes: 9 Money Moves to Consider

Your credit score is a key indicator of your financial well-being and of the risk you pose to lenders. How good is yours?
July 10, 2020

Recommended

Saver's Credit: A Retirement Tax Break for the Middle Class
Tax Breaks

Saver's Credit: A Retirement Tax Break for the Middle Class

Your retirement contributions could be the key to a lower tax bill.
July 9, 2020
8 Ways You Might Be Cheating on Your Taxes
taxes

8 Ways You Might Be Cheating on Your Taxes

Don't fall into these common traps that can get you in hot water with the IRS.
July 8, 2020
2020 Tax Deadline: When Are Tax Returns Due This Year?
tax deadline

2020 Tax Deadline: When Are Tax Returns Due This Year?

The April 15 deadline for filing your 2019 federal income tax return (and paying taxes) has been moved back...but the new due date is approaching fast…
July 8, 2020
How to Get an Extension for Filing Your Tax Return
tax deadline

How to Get an Extension for Filing Your Tax Return

If you can't wrap up your tax return by the July 15 deadline, it's easy to buy yourself more time.
July 7, 2020