(Last updated: 17 Apr 2024)
Here are the tax records you need to keep and how long you should keep them
When tax season ends it can feel like a big weight has been lifted off your shoulders – an opportunity to exhale and relax (until it all starts again next year that is!) But before you expel all tax topics completely from your mind, there is one final task you must complete.
Why you should store all of your tax records
It’s very important that you organize and store all of your tax records and documentation carefully – including a copy of your tax return.
Here’s why:
1. The IRS may audit you
If you’re ever selected by the IRS for an audit you will need to have access to your tax returns and the documents you used to complete them.
If the IRS does audit you, they’ll generally look back at your returns over the previous three years so you’ll want to have copies of the returns you filed for those years close at hand.
You’ll also need your W2s, 1042-S’s, 1099s, receipts, or any paperwork that will support your tax deductions or credits that you may have claimed on those returns.
2. You may need to make an amendment to your tax return
After you file your tax return, you may discover that you need to amend it due to an error or a tax break that you should have claimed. In such cases you will need a copy of the return you filed along with all documents (such as your W-2, 1042-S, 1099) and supporting information (like receipt and statements) you used to prepare the return.
3. In case you decide to apply for US Residency
Good tax record keeping will also be useful if you decide to apply for permanent residency (a green card). During the application process you will need to provide evidence of continuous compliance with the US tax law by enclosing the tax return(s) you’ve filed.
4. They can help you in preparing your future tax returns
Tax returns you have filed in previous years can help you in preparing future tax returns. For example, you may need to refer to previous figures like refund amounts, deductions, or tax due, etc.
How long should I keep tax records?
According to the statute of limitations outlined by the IRS, the basic rule is that you should keep all of your relevant tax documents for at least 3 years after the date in which you filed. In other words, if you filed a return in 2021 you should keep all tax documents relating to it safe until 2024.
In some cases, you may need to hang onto your records for longer than three years. For instance, you should plan on keeping tax forms for retirement accounts such as IRAs for seven years after the account is completely wiped out.
Additionally, if you buy or sell property, you should keep property records until the statute of limitations expires for the year in which you dispose of the property.
Our advice?
Keep all your US tax records at least until 3 years after you have left the US!
When do you need to keep your tax records longer?
In certain cases, tax filers should keep their documents for a period of six years.
For instance, in case you underreport your income, and the amount is more than 25% of the gross income of your tax return, you will need to keep those background records for six years.
According to the IRS, you will need to keep records for seven years if you claim bad debt deduction or worthless securities.
There are financial documents that need to be kept even forever. For instance, any records related to capital assets like purchase or sale of a home or a stock.
You should also keep records forever if you filed an erroneous tax return or if you did not file a tax return at all.
How to keep tax records?
The law doesn’t require any special record-keeping system for all taxpayers. You can keep your records in any manner that works best for you. If you plan on keeping your records for a long time you should consider scanning your documents and keeping a backup of the files.
Filing your return
All international students and scholars in the US are required by law to file a tax return. Sprintax Returns can help you to do exactly that. Our easy-to-use system removes all of the stress from the tax filing process. Plus we’ll even help you to retrieve your maximum legal tax refund!
Not bad!
Get started with your nonresident tax return
Sprintax post-filing service
The IRS may contact you after you file your tax return if they require any clarifications or additional documents from you.
Many nonresidents are daunted by the prospect of dealing with the tax office.
And let’s face it! It can be a frustrating and time-consuming experience. After all, who wants to deal with tax paperwork in their free time?!
But the good news is that Sprintax can support you if the IRS contacts you for any extra information.
By signing up for the Sprintax Post-Filing Service you can ensure that our tax experts will deal with all the additional communication with the IRS on your behalf and will take the burden off your shoulders.
Why sign up for the Sprintax Post-Filing Service?
Leave it to us! We will handle all communication with the tax office on your behalf.
Easy online process – you will save time and stress.
Peace of mind – you will be fully IRS tax compliant.
Sign up for Sprintax post-filing service here
