How Long to Keep Tax Returns: 7 Questions to Consider

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How long to keep tax returns is one of the most asked questions in personal finance. Did you know the average American spends 13 hours every year preparing federal tax returns?

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Keep reading to find out exactly how long you should keep your tax records in your situation. The answer may surprise you!

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What is the Period of Limitations?

According to the IRS, the period of limitations is the “period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax.”

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How Long to Keep Tax Returns (according to the IRS)

 The IRS advises keeping them forever. I would 100% agree with that. Especially in the digital age, where everything can be saved on a hard drive or backed up in the cloud, there's no reason to toss your actual tax returns.

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Period of Limitations That Apply to Income Tax Returns

1. Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.

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1. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later if you file a claim for credit or refund after filing your return. 2. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.

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Unique Requirements for Property Owners

According to the IRS, you should keep records relating to property “until the period of limitations expires for the year in which you dispose of the property.”

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