What Tax Documents Should You Keep — and What Can You Shred?

Once your 2024 tax return is safely filed with the IRS, it might feel like the perfect time to declutter your paperwork and clear out old files. But before you grab the shredder or start deleting digital folders, it's important to know which documents are safe to toss — and which you’ll want to hang onto.

Some paperwork still serves two key purposes:

1. Protecting you in case of an IRS audit, and

2. Helping to establish the tax basis of assets you may sell down the road

Keep Your Tax Returns — Forever

Your completed tax returns are the foundation of your financial records and should be stored indefinitely. But what about all the receipts, canceled checks, and other supporting documents?

Generally, the IRS has three years to audit a return — either from the date it was filed or from the filing deadline (whichever is later). So, if you submitted your 2022 return by the April 18, 2023 deadline, the IRS has until April 18, 2026 to assess additional taxes.

Note: If you filed late, the three-year window starts on your actual filing date.

Until that three-year period passes, hold on to:

• Receipts and invoices

• Canceled checks

• Credit card statements

• W-2 and 1099 forms

• Donation receipts

• Medical expense records

Great thing — most of these records are digitized and are likely stored on your laptop or in a database. If this is your case, ensure your accounts are safe and up to date.

Exceptions: Longer IRS Time Limits

In certain cases, the IRS gets a longer look-back period. In situations where:

• You omit more than 25% of your gross income on a return, the window extends to six years.

• You never file a return at all, the IRS can assess taxes at any time.

Having a signed copy of your return can protect you if the IRS questions whether you filed.

Keep Property and Investment Records Longer

For property or investments, your tax outcome might depend on what happened years ago. For instance, if you bought a home in 2009, made upgrades in 2016, and sold it in 2024, you’ll need to calculate your tax basis: the original purchase price plus the cost of improvements. That means you should keep records from both 2009 and 2016 tax returns — and hold onto them for at least six years after you file the return for the year of sale.

Even if you qualify for the home-sale exclusion (up to $500,000 for joint filers), keep the paperwork — you never know when you’ll need to prove your basis, and tax laws can change.

The same goes for stocks and mutual funds. Each time you reinvest dividends, it counts as a new purchase, so it’s important to track all those transactions.

Divorce or Separation? Keep Duplicate Records

If you're going through a divorce or separation, make sure you have access to all tax records — even those held by your ex. It’s wise to make copies of joint tax returns and any supporting documents, since both parties remain responsible for taxes on a joint return.

Also, save legal agreements related to custody or which parent can claim children as dependents — these documents may be relevant for future tax filings.

Safeguard Your Records

To protect your important records from fire, theft, or natural disasters:

• Store originals in a secure location, such as a safe deposit box or fireproof safe

• Keep digital backups in encrypted, cloud-based storage

• Organize your key files in a portable format you can quickly take with you in an emergency

Need Help?

If you’re unsure about what to keep or for how long, we’re here to guide you. Smart recordkeeping now can save you a lot of time, money, and hassle in the future.