How Long Should You Keep Tax Returns?

Let's face it – keeping track of tax records isn't exactly the most glamorous part of being self-employed. But it's a necessary evil if you want to keep the IRS happy. So for how long should you keep tax returns? The answer is not super straightforward. As a rule of thumb, you’re supposed to keep your tax records for three years from your last filing date in case you get hit with an IRS audit notice. This is because the IRS has three years to look over your tax return and decide whether you need to be audited. This rule applies to those tax filing online or by mail. But there are other rules that are dependent on what kind of assets you own, the tax refunds you might be eligible for and if you’ve not filed a return in a couple of years (hopefully not because you love tax fraud). We’ll also talk about when can you start filing taxes 2024 and the last day to file taxes 2024.

Table of contents

Key takeaways:...Read more

How many tax years should you keep records for?...Read more

What tax documents should I save?...Read more

How do I store these returns?...Read more

How long should I keep tax returns?...Read more

When can you start filing taxes 2024?...Read more

What is the last day to file taxes 2024?...Read more

I’m self-employed, how long to keep tax records?...Read more

Key takeaways:

How long should I keep my tax returns? Generally, the IRS expects you to keep your tax records of the past three years.
You will need to keep your tax records for longer if you own other assets.
You will need to show proof of all your returns and other relevant tax information if you get audited.

How many tax years should you keep records for?

As a 1099 taxpayer, it’s always on you to keep a record of all your tax information. But figuring out how long to keep income tax returns depends on a few things. And it’s not just until the tax filing deadline 2024. Typically, it’s necessary to maintain tax records, business records and receipts for at least three years. This rule is implemented to let the IRS conduct an audit within a three-year window and determine if you owe them any extra taxes. You also need them if you’re trying to file for a refund past the original year you should have claimed it. You can always visit the tax refund page if you’re still waiting on your refund from the IRS. Sometimes, you may be required to retain your tax records for longer. For example, if you underestimate your income by over 25% and you’re tax filing in 2024, the statute of limitations is extended, allowing the IRS to conduct an audit on your return for up to six years. To address any inquiries during this time, you would need to retain tax documents spanning six years.

Infographic entitled How Long Should I Keep My Tax Returns showing the common periods of time tax returns should be saved.

If you’re trying to depreciate any kind of property that you own, you are generally expected to hold on to those tax records until you have fully written off that asset. This also applies to any kind of retirement accounts (like IRAs) that you’re currently using. In this case, you would wait until you have fully cleaned out the account. Another factor that affects the “how long to keep tax returns?” the question is location. The amount of time you should keep your financial records when paying income taxes can also depend on state law and can differ by where you live. It's worth noting that some states may have a longer look-back period than the IRS, meaning that you need to keep records for an extended period. For example, Texas has a four-year statute of limitation while it’s only three in New York. You can always ask a CPA in your state to be on the safe side.

What tax documents should I save?

So, now that you know how long to keep tax returns, let's move on to what kinds of information you’ll actually need to save when tax filing online. If you operate as an LLC or a partnership, you’ll need to save your employees’ tax information even if they've left the business for at least four years. If you’re operating solo, you’ll need to save all the receipts, invoices and proof of any transfers you may have received or sent. Your 1099 forms and bank statements are equally as important to keep when tax filing in 2024. When it comes to keeping your tax records, it’s all about being organized and knowing exactly what to hold onto. First off, make sure you have a copy of your tax return. This is your roadmap for the year as it summarizes all your income, deductions and what you owe in taxes. You’ll definitely want this on hand for any future questions or audits. Then, focus on your income documentation. Keep those W-2 forms from your employers, which detail how much you earned and the taxes they withheld. If you’ve done any freelance work or side gigs, hang onto any 1099 forms you received; these report the payments made to you. Don’t forget your bank statements either. They provide a complete picture of your income and help verify what you’ve reported to the IRS. Let’s talk about expenses and deductions. You’ll want to keep all your invoices and receipts for anything you bought related to your work, like supplies or tools. If you paid for services, make sure to keep those receipts, too. Canceled checks are also great to hold onto; they show proof of payment for your business expenses and can back you up if the IRS comes knocking. If you own a home, you’ve got a few more documents to keep track especially if you plan on selling. Also, hold onto property tax assessments and receipts for any home improvements you’ve made. These can help when it comes time to sell or if you’re looking for deductions. Don’t overlook your investment and retirement account records. Keep your brokerage statements and any 1099s that report dividends, interest or capital gains. These documents not only help you track your investments but also ensure you report everything accurately when it comes to tax time. But you don’t have to save all your receipts if an app does it for you. With FlyFin, you can just link your expenses and let an AI find all the tax deductions you can claim every tax year. If you want expert advice on 1099 taxes, a team of CPAs is available 24/7 on the app. They can even help you by preparing and filing your federal and state tax returns.

Infographic entitled Important Tax Documents You Need To Save listing 14 types of information documents to save apart from your tax returns.

How do I store these returns?

You’re probably thinking, “Wow, this is a lot of information the IRS wants me to save.” And you’re right; it is. But you don’t have to stuff it all into an overflowing drawer in the corner of your house. You have the option to scan and save these documents digitally if you want to save some space. The IRS will still accept them as long as they are readable. And if you save your records electronically, you don't have to worry about how long you’ll need to save them. And even after the IRS limitation has run out, keeping at least a copy of your past returns is a good idea when tax filing online or by mail, even if it’s paperless. If your original tax return documents have gone missing or been destroyed, don't worry - the IRS has a solution. You can ask them for copies of your tax returns and duplicate transcripts if you need them. You have a few options to request this, like reaching out directly to the agency through their website, sending an email, giving them a call or even mailing in a written request.

How long should I keep tax returns?

When you’re asking yourself how long to keep tax records, the general rule of thumb is to keep your tax returns for at least three years. This is because the IRS typically has a three-year statute of limitations for auditing your tax returns. However, if you’re wondering how many tax years should you keep it for, there are cases where it’s smart to hold onto your records longer. For instance, if you’ve underreported your income by more than 25%, the IRS can audit you for up to six years. In more severe cases, like if you didn’t file a return or if you filed fraudulently, the IRS can go back indefinitely. Let’s say you sold a rental property five years ago. You’ll want to keep those tax returns handy, as the IRS might question the sale later on, especially if it results in a significant gain or loss. So, when considering how long to keep tax records, it’s wise to keep them at least seven years if you’re unsure. Also, keep in mind the last day to file taxes 2024, which is April 15th. You want to have everything organized well before that deadline to ensure a smooth filing process.

When can you start filing taxes 2024?

You can start your tax filing for 2024 in late January. The IRS typically announces the exact start date, but you can usually expect it to be around January 23rd to January 27th. If you’re keen on getting your taxes done early, this is when you can begin tax filing 2024. You can even prepare your tax filing online before this date, but remember that the IRS won’t accept or process your return until they officially open. For instance, if you know you’re getting a refund, getting a jump on your tax filing can help you receive that money quicker. Let’s say you’re looking forward to a trip and plan to use your tax refund to fund it. By filing your taxes early, as soon as the window opens for tax filing 2024, you could see your refund in your account in just a few weeks. Plus, early filing helps you avoid the stress of waiting until the tax filing deadline 2024, which is April 15th.

What is the last day to file taxes 2024?

The last day to file your taxes in 2024 is April 15th. Knowing the tax filing deadline 2024 is key because it marks the end of the regular tax season. If you’re wondering how long to keep tax returns, remember that this deadline is significant. If you haven’t filed your tax returns or requested an extension by this date, you may face penalties or interest on any taxes owed. Thankfully, tax filing online has made things easier than ever. You can file your return quickly and efficiently, which helps alleviate some of that tax season stress. Consider this scenario: you’re self-employed and juggling multiple 1099 forms. As the tax filing deadline 2024 approaches, you might feel overwhelmed. However, with the ease of tax filing online, you can submit your return a few days before April 15th, avoiding any panic or rush. If you think you might need more time, you can file for an extension, but remember that any taxes owed are still due by the last day to file taxes 2024.

I’m self-employed, how long to keep tax records?

If you’re self-employed, you have to know how long to keep your tax records. The general guideline is to retain your tax returns and supporting documents for at least three years. This is because the IRS typically has a three-year statute of limitations for audits. However, there are circumstances where it’s wise to keep them longer. If you file a return and omit more than 25% of your income, the IRS can audit you for up to six years. If you didn’t file a return or filed a fraudulent one, there’s no time limit on how far back they can go. As a self-employed individual, you likely have more complex tax situations, which might involve various deductions and business expenses. For example, if you deduct expenses for a home office or business trip, you’ll want to keep those records handy in case the IRS has questions. If you ever find yourself in a position where you need to reference old tax returns, knowing how long to keep tax returns becomes essential. Ideally, consider holding onto your records for seven years to be on the safe side. Also, keep in mind the tax filing 2024 deadlines, especially the last day to file taxes 2024, which is April 15th. The deadline is usually around April 15th every year. Having your records organized well before this date will help you avoid last-minute stress when filing your taxes.

How To Avoid Penalty On Tax Filing

What is the penalty for filing taxes late? When is the tax filing deadline 2024? FlyFin CPAs can make taxes effortless by helping you get back into good standing with the IRS.