How long you should keep tax documents depend on the reason for which the tax information was filed. This may depend on what expenses or events are related to the tax documents in question. The Internal Revenue Service (IRS) recommends obtaining tax documents until the statute of limitations runs out for the income or tax return reported. What does this mean?

The limitation applies to how long you have to amend a tax return. The amount of time varies if you claim credit or get a refund. The IRS has a certain amount of time to assess tax returns. The statute of limitations begins on the due date of the tax return.

• If you owed taxes it’s best to retain your tax forms for at least 3 years.
• If you didn’t report income that should have been reported but it is 25 percent more than what is reported on your return, retain records for at least 6 years.
• If your tax return was considered fraudulent, retain it permanently.
• If you have not filed a return with the IRS, retain it permanently.
• If you received a refund, retain records for 3 years.
• If your tax records are in regards to losses from bad debt reduction or securities, retain records for 7 years.
• Employment tax records should be retained for at least 4 years.
All time periods mentioned are usually counted from the day it was paid or filed. What happens when you are ready to throw away documents? Ask yourself a couple of questions:

• Are the records connected to any assets?
• What can I do with tax documents that are not related to tax purposes?
If tax records in question that are connected to asset such as property, you should keep it until the limitations run out if the property was disposed of. It is recommended to permanently retain documents related to property until the property is disposed.
If you feel you no longer need to retain your tax documents, double check before you toss them out. This is because you may need to keep them longer than the IRS for certain reasons. This may include reporting information from your insurance company or if you had information to report from your creditors.
A licensed tax professional can answer questions and concerns. If you are unsure whether or not to discard the information, it may be helpful to hold on to it until you clarify it is okay to dispose it.

Alex is a financial journalist and writer. He loves writing about personal finance and spends most of his days writing about mortgages, credit cards and whether it is sensible to take out a payday loan .