How Long To Keep Income Tax Records

The Internal Revenue Service makes different recommendations for how long to keep income tax records, based on the type of record and how it was used on tax forms. While the IRS has guidelines, some instances may require keeping records for longer periods for other purposes. For example, when seeking a loan for a business, lenders may require documentation spanning a longer history than what the IRS requires for record keeping.

The basic guidelines suggested by the Internal Revenue Service are as follows:

1. General income tax records involving a tax refund – keep records for 3 years.
2. Income tax records involving taxes owed where all income was reported and all deductions were legitimate – keep records for 3 years.
3. If you claim a loss on bad debt or worthless securities – keep records for 7 years.
4. If you do not file a tax return for a given year or file taxes deemed fraudulent by the IRS – keep records indefinitely.  
5. Employment records – keep records for 4 years.
6. In the case of amended returns – keep all records (including original return) for 3 years after the date the amended return was filed.

As previously mentioned, some tax records are used by other entities such as insurance companies, lending institutions, and professional organizations. These entities may require tax records from time frames that are longer than IRS guidelines. Before throwing away records, determine if they could potentially have other uses or be required for documentation of income or expenses by an organization other than the IRS.

A good general rule of thumb is to keep all records related to income, depreciation, or expenses for 7 years. Very few organizations require documentation beyond the last 7 years. Records for a business may need to be kept for longer periods, depending on the situation and the record.