Those Pesky Records! What do I need to keep?

November 1, 2021

Each of us needs to keep records that substantiate our tax return or other important life events for as long as they are needed. So what does this mean?

The basic retention period. Federal tax return substantiation is generally three years from the later of the tax return filing due date OR the actual filing date.

State guidelines could be different. Understand your state and local audit timelines. Often states can review tax returns after your federal return is officially closed to a potential audit.

Keep some things forever. Some items should be kept indefinitely. These include, but are not limited to, copies of your 1040tax return, major asset purchases and sales (i.e. home mortgage, home closing documents, documentation for stock and investment transactions, major asset purchase and sale documents, insurance documentation, and birth/death/marriage certificates).

Keep valuable item receipts. Keep records of any other valuable items purchased. This includes jewelry and other collectables.

Finding the cost of stocks is easier...and trickier. Stock and investment companies are now required to report the cost of your investments to the IRS. So you will not need to dig around for old transaction information to prove what you paid for your investment. On the other hand, any errors on your investment statement also get sent to the IRS, so make sure the information provided is correct or it may create an audit trigger.

Others may want your documentation. You may need records for non-tax related purposes. Copies of divorce decrees, records of insurance, and home sale closing paperwork are common examples of documents needed for other reasons.

Federal recordkeeping guidelines could become longer. Federal guidelines for record retention are generally 3 years. However, errors on your tax return for over 25% of the tax obligation require record retention of 6years. If fraud is determined, the record holding period is indefinite.


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Out of an abundance of caution we have closed our office to any in-person meetings.  We continue to work and ask our clients to upload their documents to us and chat over the phone as needed.  We are also accepting documents by drop off or snail mail.  Of course, you can always call us 425-640-8660