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While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Once you file your taxes, you should plan to keep your tax returns for a minimum of three years from the date you filed your original return. You can also keep them for two years if you are calculating from the date you paid the tax, whichever comes later.
However, if you file a claim for a loss from securities or bad debt deduction, then you should plan to keep your records for at least seven years. How long do you need to keep all these documents? That varies based on a few factors. For example, California generally has four years to audit a state income tax return. For these reasons, save any records or documents related to foreign taxes paid for at least 10 years. When it comes to investments and your property, you'll need to save some records for at least three years after you sell.
For instance, you should keep records of contributions to a Roth IRA for three years after the account is emptied. You'll need these records to show that you already paid taxes on the contributions and shouldn't be taxed on them again when the money is withdrawn. Keep investing records showing purchases in a taxable account such as transaction records for stock, bond, mutual fund and other investment purchases for up to three years after you sell the investments.
You'll need to report the purchase date and price when you file your taxes for the year they're sold to establish your cost basis, which will determine your taxable gains or loss when you sell the investment. Brokers must report the cost basis of stock purchased in or later, and of mutual funds and exchange-traded funds purchased in or later.
But we recommend maintaining your own records in case you switch brokers. If you inherit stocks or funds, keep records of the value on the day the original owner died to help calculate the basis when you sell the investment. If you inherit property or receive it as a gift, make sure you keep documents and records that help you establish the property's basis for at least three years after you dispose of the property.
The basis of inherited property is generally the property's fair market value on the date of the decedent's death. For gifted property, your basis is generally the same as the donor's basis. Keep home-purchase documents and receipts for home improvements for three years after you've sold the home.
But if you sell the house before then or if your gains are larger, then you'll need to have your home-purchase records to establish your basis. You can add the cost of significant home improvements to the basis, which will help reduce your tax liability. See IRS Publication for more details. Similar rules apply for any rental properties you own; save records relating to your basis for at least three years after selling the property.
Don't forget to check your state's tax record retention recommendations, too. The tax agency in your state might have more time to audit your state tax return than the IRS has to audit your federal return. For instance, the California Franchise Tax Board has up to four years to audit state income tax returns, so California residents should save related documents for at least that long. Skip to header Skip to main content Skip to footer. Home taxes. So, what can stay and what should go?
In most cases, you should plan on keeping tax returns along with any supporting documents for a period of at least three years following the date you filed or the due date of your tax return, whichever is later. You should keep every tax return and supporting forms. This includes W-2s , s , expense tracking, mileage logs, records supporting itemized deductions and other documents.
Keeping tax returns for the three-year time period is tied to the IRS statute of limitations. Under the statute, if you do not file a claim for a refund that you are entitled to, you generally have the later of three years from the date you filed the original return or two years from the date you paid the tax, to file the claim. Likewise, the IRS generally has only three years from the filing date or due date of the return whichever is later to assess an additional tax.
In some cases, you may need to hang onto your records longer than three years. For instance, you should plan on keeping tax forms for retirement accounts such as IRAs until seven years after the account is completely wiped out.
If you file a claim for a loss of worthless securities or bad debt deduction, you must keep records for seven years. Additionally, if you amortize, depreciate, or buy or sell property, you should keep property records until the statute of limitations expires for the year in which you dispose of the property. Before getting too excited and throwing your old returns away, check to make sure you do not need to keep it for other purposes.
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