The main reason to keep filed tax returns for at least three years is due to the IRS statute of limitations. This three-year period is generally the timeframe in which the IRS can audit the return or assess additional taxes if needed. Additionally, taxpayers have up to three years to file an amended return to claim a refund or credit for overpaid taxes. Keeping your tax returns and related documents for this period ensures you have the necessary records in case of an audit, a revisit of your return, or to support an amended filing claim. Other reasons include having proof of filing for mortgage or loan applications and protecting yourself from identity theft. The basic IRS guideline is to retain tax returns and any supporting materials related to income, deductions, or credits for at least three years from the date the tax return was filed or the tax was paid, whichever is later. Certain special circumstances can require keeping records longer, such as six years for substantial underreported income or seven years for bad debt claims, and indefinitely if returns were not filed or were fraudulent. In summary:
- IRS typically can audit or reassess your taxes for three years after filing.
- You have three years to amend your return and claim a refund or credit.
- Keeping records protects you against audits and substantiates your tax filings.
- It is also useful for loan applications or other financial verifications.
- Some situations require longer retention, but three years is the general rule.
This is why it is advised to keep tax returns and supporting documents for at least three years after filing.
