Keep federal tax records for at least three years

The Internal Revenue Service (IRS) generally expects you to keep tax records for three years from the date you filed your return or the return's due date, whichever is later. This three-year window covers most routine audits. The IRS can request documentation during this period to verify income, deductions, and credits you claimed.

The three-year rule applies to records supporting your tax return: receipts, invoices, bank statements, cancelled checks, and proof of deductions. If you filed early, the clock starts from the official due date, not your filing date. For example, if you filed your 2023 return in February 2024, the three-year period runs from April 15, 2024.

Key Takeaways

  • Keep most tax records for three years from your return's due date, though some situations require you to hold them longer.
  • If you underreported income by 25 percent or more, the IRS can audit you for six years instead of three.
  • Records for property, investments, and retirement accounts should be kept for as long as you own the asset, plus three years after you sell it.
  • State tax records often have different retention periods than federal records, so check your state's requirements separately.
  • Keep the actual tax return itself (the form you filed) indefinitely, even after you can discard supporting documents.

Extend to six years if you underreported income

If the IRS discovers you reported less than 75 percent of your actual income on your return, they can audit you for six years instead of three. This longer window applies to the entire return, not just the income discrepancy. The threshold is significant—a small math error or a forgotten 1099 form does not trigger the six-year rule, but deliberately omitting income or a major reporting mistake does.

You will not know in advance whether the IRS considers your situation a substantial underreporting. The safest approach is to keep records for six years if you are uncertain whether you reported all income correctly. If you discover an error after filing, you can file an amended return (Form 1040-X) to correct it, which may help if the IRS later questions the original filing.

Keep investment and property records indefinitely

Records related to property you own—real estate, stocks, mutual funds, or other investments—should be kept for as long as you own the asset, plus three years after you sell it. This includes purchase receipts, sale documents, improvement records, and statements showing your cost basis. The IRS uses these records to calculate capital gains or losses when you eventually sell.

For real estate, keep the original purchase deed, closing statement, and receipts for any major repairs or improvements (new roof, foundation work, kitchen remodel). Keep records of routine maintenance separately—those are not deductible and do not affect your basis. For stocks and mutual funds, retain statements showing the number of shares purchased, the price per share, and the purchase date. If you inherited property, keep the valuation statement from the date of death, as that becomes your new cost basis.

State tax records may have different timelines

Most states follow the federal three-year rule, but some states require you to keep records longer. California, for example, requires four years, while New York requires six years. A few states have no specific requirement but allow audits within a longer window. Check your state's tax authority website or ask a tax preparer what your state requires.

If you file in multiple states (because you worked in more than one state or moved during the year), keep records according to the longest requirement among those states. It is simpler to keep everything for six years than to track different timelines for each state. If you no longer live in a state where you once filed, that state's rules still explore to returns you filed there.

What records to actually keep

Keep the following documents for at least three years: W-2 forms and 1099 forms from employers and financial institutions, receipts for charitable donations, medical expense receipts, mortgage interest statements, property tax bills, business expense receipts, mileage logs if you claimed a home office or vehicle deduction, and bank and investment statements. Also keep the actual tax return you filed (the completed Form 1040 or 1040-SR and any schedules you attached).

You do not need to keep the IRS's copy of your return or acknowledgment letters. You do not need to keep the instruction booklets that came with tax forms. You do not need to keep receipts for items under a certain dollar amount if your state does not require them, though many people keep them anyway for their own records. Digital copies are acceptable—scan documents and store them on an external drive or cloud storage, as long as the image is clear enough to read.

When you can safely discard records

After three years have passed (or six years if you underreported income, or longer if you own the asset), you can discard supporting documents. However, keep the actual tax return itself indefinitely. Some people keep returns for seven years just to be safe, but the IRS has no rule requiring this—three years is the legal minimum for the supporting documents.

Before you throw away old records, photograph or scan anything you might need later: proof of large purchases, home improvement receipts, or investment statements. If you ever need to prove you paid a debt or made a charitable donation years later, a digital copy is easier to store and retrieve than a box of papers. Shred documents containing Social Security numbers, bank account numbers, or other sensitive information rather than straightforward throwing them away.

Frequently Asked Questions

Do I need to keep receipts if I use accounting software?

Yes. Accounting software records the transaction, but the IRS wants to see the original receipt or invoice as proof. Software is a record of what you entered, not proof of what actually happened. Keep the physical or digital receipt alongside your software records.

What if the IRS audits me after three years?

If the IRS contacts you about a return older than three years, they must have a reason—usually substantial underreporting of income or a specific issue they are investigating. Respond with whatever records you still have. If you discarded records in good faith after the three-year window, explain that to the IRS. You are not penalized for following the standard retention period.

Can I throw away records if I file electronically?

Yes. Filing electronically does not change how long you keep supporting documents. The IRS has a copy of your return, but you still need your receipts and statements if they ask for them. Electronic filing is faster, but it does not reduce your record-keeping obligation.

How long should I keep records for a business I no longer own?

Keep business records for three years after you close the business, or longer if you sold business property or equipment. If the business had employees, keep payroll records for at least four years. If you are still paying off a business loan, keep records until the loan is paid off plus three years.

Do I need to keep records for returns I did not file?

If you did not file a return for a particular year, there is no three-year clock. The IRS can go back further to assess taxes on unfiled years. If you realize you missed filing a return, contact a tax professional about filing it now, even if it is years late.