How Many Years of Tax Returns Must I Keep?

Most taxpayers with a w-2 income should keep three or four years of prior tax returns. Exceptions exist when the IRS determines there is a substantially inflated deduction or grossly omitted income item. If fraud or any criminal activity has taken place there is no time limit.

Legitimate filers will want to keep tax returns in years when IRA deductions have been made. If the IRA deduction is not claimed on the federal return, that contribution should not be taxed when withdrawn from the account. MA allows no IRA deduction, so all IRA contributions must be tracked to avoid being taxed a second time.

Partnerships should keep all returns until the partnership is dissolved. Businesses with payroll have longer retention periods.

Tax returns with home office deductions or rental activity should keep their returns until the property is sold.

Taxpayers who reinvest dividends and capital gains should keep those returns that reported such as income.

The best answer is to check in with your tax preparer about your situation. The three year answer is common, because that is the time limit given to taxpayers to amend their return and get extra refund money. The seven year answer is popular, because that is the time period for the IRS come after taxpayers with major errors. The real ans