Getting audited is not a walk through the park. But, it happens to the best of us even when we feel like we have dotted every “i” and crossed every “t.”
It’s important to be prepared and that’s why one of the most common questions I hear is “How long should I hold on to my prior year tax returns?” The good news is that the IRS has a statute of limitations on when they can take action.
IRS Statue of Limitations From Date of Filing
Auditing a Return – 3 Years
Unreported Income – 6 Years
Keep it for 7 Years
A good rule of thumb is to hold on to your tax returns for at least seven years. If you have records connected to assets, such as the purchase of property or other investments you’ll want to hold on to those records until the statute of limitation expires for the year in which you dispose of the asset. If you are in doubt, check with your tax preparer.
More Tax Questions?
The IRS has a user-friendly site of frequently asked questions. Visit it here www.irs.gov/faqs/.