01/14/2026
One of the most asked questions is how long should I keep my tax documents? Here is an in-depth response:
When to toss tax records
By Small Business Tax Strategies / December 31, 2025
As a new year begins, you may decide to remove some of the clutter in your home. But what about the copies of tax returns that have been piling up?
Strategy: Keep tax returns and related records for at least three years. That’s the statute of limitations for the IRS to audit your return, making it the bare minimum.
But you might hold on to some records even longer, especially if you’re risk averse.
The three-year period is extended to six years if gross income is understated by more than 25%. If tax fraud is involved, returns may be challenged indefinitely.
In addition, the length that you keep tax records may depend on the type of records. Here are several common situations.
Supporting documents. You probably have written evidence that supports claims made on your tax returns, such as receipts, expense logs, bank statements and sales records. Keep these for at least the three-year period.
Real estate. Hold on to these until three years have passed from the time you sell the property. Reason: The records, including expenditures for home improvements, can help establish your tax basis for the purposes of determining gain or loss on a sale. This may preserve the full amount of the home sale gain exclusion (up to $250,000 for single filers; up to $500,000 for joint filers).
Bad debts. Generally, you have three years to amend your return, the same as the IRS audit period. But you can take up to seven years to stake your claim to deductions for bad debts or worthless securities. Don’t be so quick to shred these records.
Securities. You must report transactions involving sales of stocks, bonds and other securities. Maintain detailed records of acquisitions and sales including dates, amounts, prices and dividend reinvestments. Hold on to the records for the time you own the investments plus the three-year statute of limitations.
IRAs. This will seem never-ending. You should keep records of IRAs, including required minimum distributions (RMDs) and payouts from inherited accounts. Also, maintain records for Roth IRAs that allow tax-free qualified distributions. Remember, don’t discard records for at least three years after the account is emptied out.
Tip: It’s usually better to be safe than sorry. Err on the side of keeping tax records a little longer than legally required.
