How Long Do Federal & State Tax Returns Need to Be Kept?

by Kristine Tucker ; Updated July 27, 2017
Keep tax returns for a minimum of three years.

There is no law governing how long you must keep your tax returns. Under most normal circumstances, the Internal Revenue Service (IRS) advises taxpayers to keep federal and state tax returns for three years. In specific cases, you may need to keep your federal and state tax returns for six years or more. Retaining your federal and state tax returns enables you to use them as guides for future returns, and they provide documentation if filing discrepancies occur.

Statue of Limitations

The statue of limitations on a properly filed and executed federal tax returns is three years. That means the IRS has three years to collect owed taxes or start legal proceedings. As a result, it is advisable to keep your tax returns for a minimum of three years.

Gross Income Reporting

If you failed to report more than 25 percent of your gross income in a given year, you should keep your tax return for six years. Your failure to report all of your income gives the government six years to collect all overdue back taxes. Maintaining documentation of the reported income shortages on your tax return helps you calculate interest and penalties.

Worthless Securities

If you claimed worthless securities or valueless stocks on your tax return, the IRS advises keeping your return for seven years. The credibility of stocks and securities is assessed up to seven years after they are declared worthless.

Fraud

In extreme cases of fraudulent conduct concerning federal and state tax returns, it is advisable to keep your returns indefinitely. There is no statue of limitations on fraudulent tax filing, so the IRS is allowed to collect overdue taxes or commence legal action at any time.

About the Author

As curriculum developer and educator, Kristine Tucker has enjoyed the plethora of English assignments she's read (and graded!) over the years. Her experiences as vice-president of an energy consulting firm have given her the opportunity to explore business writing and HR. Tucker has a BA and holds Ohio teaching credentials.

Photo Credits

  • Creatas/Creatas/Getty Images