The IRS guidelines for record retention depends on the type of expense, action or event that the particular document supports, explains the Internal Revenue Service. The IRS suggests that taxpayers keep records that support a credit, deduction or income until the period of limitation on that tax expires.Continue Reading
The IRS defines the period of limitations as the period of time that a taxpayer can amend his tax return to claim a refund or credit, or the time in which the IRS can assess additional tax on a return, explains the agency's website.
Generally, the IRS suggest that taxpayers keep records for three years from the date the taxpayer filed his return or two years from the date the taxpayer paid his tax, whichever is later. If a taxpayer filed a fraudulent return, records should be kept indefinitely. Taxpayers should also keep records indefinitely if they never filed their returns. Records should be kept for seven years if a claim for a loss from a bad debt deduction or worthless security was filed and six years if a taxpayer did not report income that he should report and that income is 25 percent more than the gross income shown on his return, explains the IRS.
Employment tax records should be kept for at least four years after the date the tax is paid or becomes due, whichever is later, the IRS adds.Learn more about Taxes