What to Keep, and for How Long
Retirement is when the filing cabinet finally gets emptied, and it is the moment to be careful about what leaves. Most returns and their supporting papers can go after a few years. A small category cannot go at all, because it establishes what you paid for things, and without it the whole sale price can be treated as profit.
- Three years, usually:: The ordinary period matches the time for assessing tax or claiming a refund.
- Longer in some cases:: Substantial unreported income and unfiled returns extend or remove the period entirely.
- Basis records outlive the returns:: They must survive until the year the asset is sold, plus the period after that.
- Some things are permanent:: Non-deductible IRA contributions and property improvement records have no natural end date.
Where the AI summary above gets this wrong
"Keep your tax records for seven years and then shred them."
That's surface-true. Here's what it misses:
- The period runs from filing, not from the tax year — The ordinary retention period is measured from when the return was filed or was due, whichever is later, and matches the period for assessing tax or claiming a refund. A return filed late resets the clock forward, not back.
- Basis documents are on a different schedule entirely — The papers showing what you paid for a house, a share holding or an investment property must survive until the limitation period expires for the year you sell it. For an asset held forty years that means keeping the purchase documents for forty years and a few more.
- Two categories should simply never be thrown away — Records of non-deductible IRA contributions, which prevent the same money being taxed twice, and the running record of improvements to a home, which reduce the gain on sale. Both are cheap to keep and irreplaceable once gone, which is the worst possible combination for a filing cabinet clear-out.
01 The ordinary periods
The general rule ties retention to the limitation period. Keep the return and its supporting records for three years from the date the return was filed or its due date, whichever is later, which matches the time for the agency to assess additional tax and for you to claim a refund.
Longer periods apply in specific situations: six years where income was substantially understated, seven for a claim relating to a worthless security or a bad debt deduction, and indefinitely where no return was filed or the return was fraudulent.
Employment records for a household employee have their own period. Anyone who has paid for care at home should keep those separately, since they support both the employment filings and any medical expense claimed.
Source: How long should I keep records
02 The records that outlive the returns
Basis is the exception that matters. The documents establishing what you paid for an asset have to survive until the limitation period expires for the year of the disposal, not the year of the purchase.
For a home that means the closing statement, and every receipt for improvements over the decades, since improvements add to basis and reduce the gain when it is sold — the arithmetic behind the true cost of ownership. For shares it means the purchase confirmations, particularly for anything held before brokers were required to report basis.
The consequence of losing them is not a penalty. It is that the gain is computed from a basis you cannot prove, which in the worst case means tax on the entire sale price rather than on the profit.
Shows: the difference between being taxed on the gain and being taxed on the whole proceeds, which is what happens when basis cannot be documented. Ignores: state tax, whether a reasonable reconstruction would be accepted, and the step-up that removes the problem at death.
Source: Publication 551
03 A practical filing system
Three categories are enough. A permanent file holding basis documents, records of non-deductible IRA contributions, and the closing papers for any property. A rolling file holding the last several years of returns and their supporting documents. And everything else, which can go on the ordinary schedule.
Scanned copies are generally acceptable and are far more likely to survive a house move, a flood or an executor's clear-out than paper in a loft. Storing them somewhere a family member can reach is part of the point.
The final piece is a note explaining where everything is. The person most likely to need these records is not you but whoever administers your affairs afterwards, and a one-page index is worth more to them than the documents are without it.
Source: Publication 17
The clear-out that worries me is the well-meant one, where somebody retires, decides thirty years of paperwork is absurd, and keeps only the recent returns. Two things should survive that: anything showing what you paid for a property or a holding, and any record of IRA contributions you did not deduct. Scan them, put them somewhere your family can find, and then throw out as much of the rest as you like.
FAQ
How long should I keep tax returns?
Generally three years from the date of filing or the due date, whichever is later. Longer periods apply where income was substantially understated, for worthless securities, and indefinitely where no return was filed.
What records should I never throw away?
Records of non-deductible IRA contributions and of improvements to property. Both reduce tax later and cannot be reconstructed once lost.
What happens if I cannot prove what I paid for something?
The gain is computed from a basis you cannot substantiate, which in the worst case means being taxed on the entire sale price rather than on the profit.
Sources
Regulator references
- How long should I keep records · Internal Revenue Service · 2026The retention periods tied to the limitation period for each situation.Last verified: 2026-09-07
- Publication 17 · Internal Revenue Service · 2026The records that support items on an individual return.Last verified: 2026-09-07
- Publication 551 · Internal Revenue Service · 2026Why basis records have to outlive the returns they relate to.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.