How long to keep tax records depends on what the paperwork proves. A filed return and its acceptance confirmation help establish that you submitted a return, while records for a home, investments or inherited assets can support the tax basis used when you sell. Some papers need to stay with you for years.
At a Glance
- Keep a copy of each federal return and proof that it was filed.
- The Internal Revenue Service generally has three years from filing to audit a return.
- Keep home and investment purchase records while you own the property, then at least three years after filing the return that reports its sale.
- For inherited property, save the date of death value and supporting appraisal or securities records.
- Back up digital records and keep paper copies where practical.
How long to keep tax records for a filed return
The general federal audit period is three years from the date you file. Keep a copy of the return and documentation showing it was submitted. The clock does not settle every possible question, though. If the IRS says it has no record of your return, you may need to show that you filed, so evidence of submission matters as much as the return itself.
The right proof depends on how you filed. For a paper return, retain a registered or certified mailing receipt, or the receipt from a private delivery company such as FedEx or UPS. If you filed online, save the message confirming that the return was accepted. Tax software such as TurboTax may send that confirmation. If a paid preparer filed for you, request the acceptance acknowledgment and keep it with your copy.
Keep copies of state income tax returns indefinitely, along with proof of filing. State rules can differ, so retain the records associated with each state return rather than assuming the federal retention period covers them.
| Record | Retention period described here | Why to keep it |
|---|---|---|
| Federal return and filing confirmation | Keep the return and proof; the usual audit period is three years after filing | Shows what you reported and helps establish that you filed |
| State income tax return and proof | Keep indefinitely | Preserves the return and evidence of submission |
| Home purchase and improvement records | While you own the home, then at least three years after filing the return reporting its sale | Can support the home’s tax basis |
| Other property purchase records | While you own the property, then at least three years after filing the sale return | Documents purchase cost and acquisition expenses |
| Inherited property value records | While you own the property, plus the period in which the IRS can question a sale report | Supports the value used to establish basis |
Home records can reduce the gain you report
A home can be a major asset and a significant source of taxable gain when sold. Under the conditions described in tax law, as much as $250,000 of gain on a principal residence may be excluded from tax, or $500,000 for joint filers. If you do not meet the conditions, or your gain exceeds the applicable limit, the remaining gain may be taxable.
Records help establish the home’s cost basis, which begins with what you paid. Certain capital improvements can raise that basis. Examples include an addition, a new roof, appliances, an in ground swimming pool and landscaping. Receipts and other proof of payment help document those costs. IRS Publication 523 lists capital improvements for which homeowners should retain evidence.
Keep the original settlement statement and paperwork from the purchase, too. Some closing expenses may be added to the home’s cost basis. Relevant items include abstract or title search fees, charges to install utility services, legal fees for a sales contract or deed, recording and survey fees, title insurance, and transfer or stamp taxes. Preserve these records throughout ownership, then for at least three years after filing the return that reports the sale.
Keep acquisition costs for investments and other property
Homeowners are not the only people who need a paper trail. If you own stocks, a vacation home, rental property or artwork, save records showing what you paid and any commissions or other acquisition costs. When you sell, those figures help determine your gain. Without documentation, you could have difficulty supporting your basis if the IRS questions the amount on your return.
Hold on to these records while you own the property and for at least three years after filing the return that reports its sale. Brokerage firms and mutual fund companies must provide cost basis information for certain securities, including stocks bought from them since 2011. Still, keep your own copies. A move to another firm or a merger can leave you without records you expected to be available.
Inherited property needs a date of death value
For inherited property, the basis generally becomes the property’s value on the date the previous owner died. This is known as a stepped up basis. Save the calculations and source documents used to establish that value, because you may need them years later when the property is sold.
For people who died in 2022, estates valued above $12.06 million reported value on Form 706. For people who died in 2023, the stated threshold was above $12.02 million. Smaller estates may still have to report property values on state death tax forms, even when no federal estate return is required. An executor, administrator or personal representative may have information about the estate’s tax reporting.
When no return is required, heirs are responsible for determining the property value used as basis. Ask for the value of publicly traded securities on the date of death and obtain an appraisal for inherited real estate dated to that day. Keep the valuation records for as long as you own the assets, plus the period in which the IRS can question a reported sale.
A simple filing system can prevent lost records
Separate records by tax year and asset. One folder can hold filed returns and acceptance messages; another can hold home purchase documents and improvement receipts. Keep investment and inheritance records with the relevant account or property. This makes it easier to find the right proof when preparing a return or documenting a later sale.
Scanning important papers and storing the files on a computer, flash drive or in cloud storage can make records easier to retrieve. Do not rely on just one copy. Devices can fail or go missing, so keep a backup in another location. Retain original paper documents as well when possible. A clear system protects records that you, or your heirs, could need long after the filing season has passed.
Will your records still support a sale years from now?
Before discarding tax paperwork, identify whether it relates to a return, a property you still own or an asset you may later sell. Keep filing proof with each return, and preserve basis records until the applicable period after sale has passed. That small sorting step can make a future tax calculation far easier to substantiate.