How Long to Keep Tax Records?

With another tax season approaching, you may be wondering how long you need to hold on to your tax records. The standard answer is a minimum of three years, but maybe longer, especially if you are risk-aversive.

Reason: The usual statute of limitations is three years. So the IRS has three years to review the situation and assess any tax deficiencies. But the three-year period is extended to six years if gross income is understated by more than 25%. If tax fraud is involved, returns may be challenged at any time.