Keep the records that support a federal tax return for at least three years after filing, which is the IRS's general period for assessing additional tax. Keep them six years if income may have been understated by more than 25%, seven years for a bad debt or worthless securities deduction, at least four years for payroll records, and property records until three years after the year you sell the property.
How long should you keep tax records?
For most taxpayers, the answer is three years from the date you filed. That is the period in which the IRS can generally assess additional tax, and it is also the window for claiming a refund on an amended return. Several common situations extend it, however, and the IRS retention guidance sets out each one.
| Situation | Keep the records for |
|---|---|
| A typical return | 3 years from the date you filed |
| You file a claim for a refund or credit after filing | 3 years from filing, or 2 years from paying the tax, whichever is later |
| Income was understated by more than 25% of the gross income on the return | 6 years |
| A deduction for a bad debt or worthless securities | 7 years |
| Employment tax records | At least 4 years after the tax was due or paid, whichever is later |
| Property, such as a home, rental, equipment or investments | Until the period of limitations expires for the year you dispose of it |
| No return was filed, or a return was fraudulent | Indefinitely |
Which records matter most for a business?
A business owner’s records fall into three groups, and each follows a different clock. Income and expense records, such as bank and card statements, invoices, receipts and mileage logs, follow the three-year rule for the year they support. Payroll records follow the four-year rule. Asset records, including purchase documents, improvements and depreciation schedules, must be kept for as long as you own the asset and for three years after the return reporting its sale, because they establish the basis that determines your gain or loss.
Consider a Littleton contractor who bought a $60,000 excavator in 2019 and sold it in 2026. The receipts for 2019’s fuel and supplies could have been discarded years ago, but the excavator’s purchase invoice and depreciation history must be kept until at least 2030, three years after the 2026 return is filed in 2027. Without them, there is no reliable way to show how much of the sale price was taxable gain.
Which personal records should you keep?
The same logic applies at home. Keep copies of filed returns permanently; keep W-2s, 1099s, receipts for deductions and credits, and brokerage statements for at least three years; and keep records of what you paid for your home, its improvements and investments you still own until three years after you report their sale. Records of nondeductible IRA contributions belong in the permanent file, because they determine how much of a later withdrawal is taxable.
A simple retention schedule
A practical approach is to sort everything into three folders each spring:
- Permanent: filed tax returns, records of property and investments you still own, nondeductible IRA records, and entity documents such as operating agreements.
- Seven years: the supporting records for each return, which covers the six- and seven-year exceptions as well as most state requirements.
- Discard when the period ends: routine receipts and statements once the year they support has passed its retention date.
Before discarding anything, consider who else might need it. Lenders, insurers, buyers of a business and courts can all ask for records older than the IRS requires. Electronic copies that are complete and legible are acceptable, and storing them in secure, backed-up storage, such as our client portal, protects them better than paper. If you are unsure whether a record can go, our team can tell you, and a well-organized set of records is one of the most useful things to bring to tax preparation.
Common questions
How long should I keep my tax returns?
Keep the returns themselves permanently. They take little space, they support future amended returns and loan applications, and they are the starting point if the IRS ever questions a later year. The receipts and statements behind each return can usually be discarded once the retention period for that year has passed.
How long do I need to keep receipts for business expenses?
At least three years from the date you filed the return that claimed them. Receipts for equipment, vehicles and other depreciable property follow the property rule instead and are kept until three years after the year you dispose of the asset.
How long must an employer keep payroll records?
The IRS requires employment tax records to be kept for at least four years after the tax is due or paid, whichever is later. That includes wage records, W-4 forms, copies of Forms 941 and W-2, and records of tax deposits.
When can records be kept indefinitely?
The IRS has no time limit to assess tax when a return was never filed or was fraudulent, so in those situations records should be kept indefinitely. This is one more reason to file every required return, even late.
Are scanned copies acceptable?
Yes. Electronic copies are acceptable as long as they are complete, legible and can be retrieved and printed if requested. Keeping them in secure, backed-up storage is safer than paper alone.
Does Colorado follow the same timeline?
Colorado's assessment period for state income tax is set by state law and can differ from the federal one, so many advisors keep Colorado records for at least four years after filing. Keeping supporting records for seven years generally covers both federal and state needs.