How Long You Should Keep Tax Records (And Why)

When tax season is over, it’s really tempting to toss everything in a box (or the trash) and forget about it.

But here’s the tricky part: the IRS doesn’t forget as quickly as we do.

Knowing how long to keep your tax records can protect you if there’s ever a question about your return, help you prove income or deductions, and make future filing a lot easier. The good news is you don’t have to keep everything forever. You just need a simple system and a few key timelines.

Let’s dive into it. 

First Things First: What Counts as a “Tax Record”?

When people think “tax records,” they often picture just the tax return itself. In reality, it includes anything that supports the information on that return.

That usually means:

• Filed tax returns (federal and state)
• W-2s and 1099s from employers or freelance work
• 1098s for mortgage interest or tuition
• Bank and credit card statements that show deductible expenses
• Receipts for deductions (charitable donations, medical expenses, business costs, etc.)
• Records of major purchases or sales (like a home, vehicle, or investments)
• Documents showing contributions to retirement accounts
• Proof of tax credit eligibility (like childcare expenses or education costs)

If it helped you calculate a number on your return or could be used to prove that number later, it’s probably worth keeping.

The General Rule: At Least 3 Years

Most of the time, you’ll hear that you should keep tax records for at least three years.

Why three years?

The IRS generally has three years from the date you file your return to:

• Start an audit
• Ask follow-up questions about reported income, deductions, or credits

You also have three years to:

• Amend a return if you made a mistake
• Claim a refund you’re owed

So, as a baseline, keeping your return and supporting documents for three full years after you file is a good starting point.

Example:

If you filed your 2024 return in April 2025, plan to keep those records until at least April 2028.

But there are some important exceptions where you’ll want to hang on to things longer.

When You Should Keep Records for Six Years

There’s a big jump from 3 years to 6 years in some situations.

The IRS can go back six years if they believe you underreported your income by a significant amount (generally more than 25%).

Even if you never intend to do that, life happens:

• You forget about a 1099 from side gig work
• A bank or vendor reports income differently than you remember
• Some freelance or contract work slips through the cracks

To protect yourself, many people choose to keep all income-related records for six years, especially if:

• You’re self-employed
• You have multiple side jobs
• You receive a lot of 1099s or cash payments

This might include:

• 1099s
• Invoices and payment records
• Bank deposits related to your work
• Business expense receipts and logs

If your income situation is more complex than a simple W-2, keeping a 6-year paper (or digital) trail is often worth the extra space.

When You Should Keep Records “Indefinitely”

Some documents shouldn’t be tied to just a single tax year. They’re part of your long-term financial story.

You’ll want to keep certain records for as long as you own the asset or even longer. That includes:

1. Home and Property Records

Keep documents related to the purchase, improvement, and sale of a home or other real estate:

• Closing statements
• Purchase contracts
• Records of major repairs and renovations
• Home improvement receipts
• Property tax records
• Documents showing sale price and fees when you sell

Why?

These records help you calculate your cost basis (what you invested in the property), which affects how much taxable gain you might have when you sell. Without them, you could end up paying more tax than necessary.

2. Investment Records

For things like stocks, mutual funds, or other investments, keep:

• Trade confirmations
• Statements showing purchase price and sale price
• Records of dividends and reinvested earnings

These also go into your cost basis and gain/loss calculations when you sell.

3. Retirement Account Information

For IRAs, 401(k)s, and other retirement accounts, keep:

• Contribution records
• Rollover documentation
• Forms that show after-tax contributions (this can prevent double-taxation later)

These records can matter decades later, when you start withdrawing funds in retirement.

Special Situations: When You Should Keep Records Even Longer

Here are a few other cases where longer is better:

1. If You Filed a Fraudulent Return (or the IRS Thinks You Did)

If fraud is suspected, the IRS has no time limit to review your return.

That’s one reason it’s important to be honest and accurate and to keep clear records to back up what you reported.

Even if you never intentionally do anything wrong, having documentation protects you if something looks unusual on paper.

2. If You Didn’t File a Return

If you were required to file and simply didn’t, the time clock for the IRS doesn’t really start because there was no return filed. Records related to that year can be important far down the road.

If you’ve skipped years, it’s usually better to work with a tax professional to get caught up than to hope it never comes up.

Paper vs. Digital Records: What’s Best?

You don’t need a file cabinet overflowing with faded paper to be organized. Digital is perfectly fine as long as it’s:

• Legible (easy to read)
• Complete (all pages, not cropped or cut off)
• Backed up (not just on one device that could crash)

Some ideas:

• Scan or photograph important receipts and documents
• Store them in clearly labeled folders by year (e.g., “Taxes 2024”)
• Back everything up using an external drive or secure cloud storage

For especially important items - like home purchase records - it’s smart to keep both a paper copy and a digital version.

When It Is Okay to Let Go

You don’t have to be a “record hoarder.” At some point, it’s perfectly fine to clean house.

Once you’re sure:

• The time window for IRS questions has passed
• You don’t need the documents for home, investment, or retirement records
• The information is no longer useful for planning

…then it’s okay to shred and delete.

Just make sure you shred paper documents (don’t just toss them), and permanently delete digital files when you’re sure you’re done with them.

How AMG Finance’s Tax Prep Services Can Help You Stay Organized

All of this might sound like a lot to keep up with. And honestly, it can be, especially when life is busy and money is stressful.

That’s where having help makes a big difference.

Tax Prep Isn’t Just About Filing Once a Year

A good tax prep service doesn’t just plug numbers into a form and hit “submit.”

They help you:

• Understand which documents actually matter
• Know how long you should hold onto them
• Avoid mistakes that could cause problems years later

When you work with AMG Finance for tax preparation, you’re not just getting a one-time filing. You’re getting a partner who can:

• Tell you what to keep for this year and what you can safely toss
• Help you create a simple system for storing records
• Answer questions when you’re not sure whether something is important

Make Future Tax Seasons Easier on Yourself

Think of your future self for a second.

Would they rather:

• Dig through random boxes, email attachments, and old envelopes every April

or

• Open a neat folder (physical or digital) with exactly what they need and know that a professional already helped them organize it?

Less Guesswork. More Confidence.

Keeping tax records isn’t about being perfect or never making a mistake. It’s about being prepared, protecting yourself, and making smarter decisions with your money.

If you’re tired of feeling unsure every time you open your mailbox or sit down to do taxes, you don’t have to handle it alone.

Ready for a Fresh Start with Your Tax Records?

Here’s a simple next step:

• Gather what you have from the past year
• Put it in a folder - even if it’s messy
• Bring it to AMG Finance for tax prep help

They can walk you through:

• What you actually need to keep
• How long to keep it
• How to set up an easy system so next year isn’t so stressful

Whether your situation is simple or complicated, AMG Finance is here to help you file correctly, stay protected, and feel more confident about your finances.

If you’re ready to get organized and make this tax season (and the next one) easier on yourself, reach out to AMG Finance today to schedule your tax preparation appointment.