As we have now passed the extended deadline for filing your personal tax return, a common question is “How long should I hold onto copies of my tax returns and documents?” Most tax payers are happy they are getting a refund and stuff their tax return and supporting documents in a file and forget about it. Businesses that require an annual audit or review of financial statements also often question how long they should maintain the documents they receive at the conclusion of these engagements. Let us shine some light on the subject so you’re no longer in the dark.
Individual Tax Return or Corporate Tax Returns:
Per the IRS Statue of Limitations, copies of tax returns and supporting documents should be kept for 3 years after the later of the due date of the return or 3 years after the date the return was actually filed.
- Example: You filed your individual tax return on March 12, 2016 (due date April 15, 2016). You should maintain your tax returns and supporting documents until April 15, 2019. If you extended your tax return (due date October 15, 2016) and it was filed September 2, 2016, then you should maintain documents until October 15, 2019.
Tax documents include support for all income (W-2’s, 1099’s for interest/dividends, etc.), deductions (receipts for charitable contributions, medical expenses, business expenses, etc.) or credits (tuition expenses paid for your child/dependent).
There are some exceptions for holding onto tax documents longer than 3 years depending on various tax situations that may apply to you and or your business. Prior to disposing of tax records you should consult with your accountant if you have any questions.
Audit/Review/Compilation Documents:
Currently there is no set requirement for holding onto your audit or review documents. A Company’s internal retention policy usually drives how long the Company will hold onto all financial statements or letters that are issued with the audit, review or compilation. A suggested practice would be to permanently maintain these documents. They should be readily available in case they are requested in a new banking situation or if a valuation is being performed on your business if you’re looking to sell your Company. It is common practice for your accountant, who performed the audit, review or compilation to hold onto these documents for a minimum of 7 years.
If you have any further questions regarding record retention please contact Joseph Manolas, jmanolas@meadenmoore.com.
