How Long To Keep Tax Returns: 7 Questions To Consider

Did you know the average American spends 13 hours every year preparing federal tax returns? For small business owners, that figure almost doubles to 24 hours!

For most people, three years is a good time frame, but it could be much longer in many situations. Plus, it can often be a good idea to hold onto records longer than the required time for other non-tax reasons.

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

What is the Period of Limitations?

To measure the period of limitations, it starts at the time when the tax return was filed. Returns filed early are treated as filed on the due date.

For the actual tax return itself, the IRS advises keeping them forever. I would 100% agree with that.

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

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.

Unique Requirements for Property Owners

How Long Should I Keep Tax Returns as a Small Business Owner?

According to the IRS guidelines above, they have up to six years to audit you if you forgot or neglected to report at least 25% of your income.

For that reason, a business owner probably should plan to keep at least six years worth of 1099s and other records of business income and expenses to be safe.

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