Old tax papers can pile up quickly, taking up space in your home or office. But throwing them away too early can create problems if you need them later.
Many people either keep every document for years or shred them before it’s safe. Knowing how long to keep tax records helps you avoid both mistakes. This guide covers retention timelines, important documents to save, and safe ways to shred old tax papers.
How Long Should You Keep Tax Records?
Most taxpayers should keep their tax records for at least three years from the date they file their tax return. This includes documents that support reported income, deductions, and tax credits.
However, some situations require longer storage. For example, you may need to keep records for six or seven years, while certain cases require keeping them indefinitely. The IRS provides specific record retention guidelines based on your tax situation.
Tax Record Retention Periods by Situation
The time you need to keep tax records depends on your filing history and financial situation. Here are the common IRS retention periods to help you decide when old tax documents are safe to discard.
| Situation | How Long to Keep |
|---|---|
| Regular tax returns | 3 years |
| Employment tax records | At least 4 years |
| Underreported income | 6 years |
| Bad debt or worthless securities claims | 7 years |
| Unfiled or fraudulent tax returns | Indefinitely |
The 3-Year Rule (Most Taxpayers)
Most taxpayers can keep supporting tax documents for three years after filing their returns. If you file a refund claim after filing, keep records for three years from the original filing date or two years from the payment date, whichever is later.
4 Years for Employment Tax Records
Employers and small business owners with employees must keep employment tax records for at least four years. This includes payroll details, tax payments, and employee wage information.
6 Years for Underreported Income
If you leave out more than 25% of your gross income on a tax return, you should keep supporting records for six years. This gives the IRS more time to review the reported income.
7 Years for Bad Debt or Worthless Securities Claims
If you claim a deduction for bad debt or a loss from worthless securities, keep the related tax records for seven years. These papers help support your claim if questions arise later.
Keep Records Indefinitely
Some tax records should never be discarded. Keep them indefinitely if you never filed a tax return or filed a fraudulent return.
Which Tax Documents Should You Keep?
Keeping the right tax documents makes it easier to answer questions about your income, expenses, and deductions. Some records also help you calculate taxes when you sell property or investments.
Core Tax Papers
Keep copies of your filed tax returns, W-2 forms, and 1099 forms. Save receipts, bank statements, and other documents that support your deductions, tax credits, and reported income.
Property and Investment Records
Keep home purchase documents, renovation receipts, and stock purchase records. These help establish your property’s cost basis and investment gains. Hold onto them until the applicable retention period ends after selling the property or investment.
Paper vs. Digital Copies
You don’t need to keep every document in paper form. Clear digital scans can serve as records, provided they remain readable and easy to access. Store them in a secure folder and maintain a backup to prevent accidental loss.
How to Shred Tax Records Safely
Old tax documents contain sensitive information that can put your privacy at risk. Once their retention period ends, don’t simply throw them into the trash. Take a few extra steps to protect your personal details.
Why You Should Never Just Toss Them
Tax papers often contain Social Security numbers, bank details, home addresses, and income information. If someone finds these documents, they could misuse your details for identity theft or financial fraud.
Tips for Shredding at Home
Use a cross-cut or micro-cut paper shredder to destroy sensitive documents. Shred papers in small batches to avoid overloading the machine. Remove staples and paper clips if your shredder requires it.
Use Community Shredding Events and Services
If you have a large pile of old tax papers, community paper shredding events offer an easy way to dispose of them securely. Many events accept bulk paper documents, saving you time and effort. Professional shredding services are another option for larger volumes.
Frequently Asked Questions
Can I shred tax returns after three years?
Yes, most taxpayers can shred supporting tax documents after three years from filing. However, check for exceptions that require longer storage before shredding.
Should I keep old tax returns forever?
You don’t need to keep every tax return forever. However, keeping copies of filed returns permanently can help with future financial and tax questions.
How long should I keep W-2s and 1099s?
Keep W-2s and 1099s for at least three years after filing your tax return. Keep them longer if your situation requires an extended retention period.
Is it safe to keep tax records on your computer?
Yes, digital storage is generally safe when you use strong passwords and encryption. Keep secure backups to prevent losing important tax documents.