How long should you keep tax records?

Every year someone asks whether they can finally throw away the box in the closet. Usually part of it, yes.

The general rule: three years

Keep your return and the papers that support it for at least three years from the date you filed. That is the period in which the IRS can normally question a return, and in which you can amend it.

When to keep them longer

• Six years, if you left out income worth more than a quarter of what you reported.
• Seven years, if you claimed a loss from worthless securities or a bad debt.
• At least four years for payroll records, if you have employees.
• For property, until the period runs out for the year you sell it. You will need the purchase records to work out your gain.

What I keep myself

A copy of every return, permanently. They take little room, and lenders and agencies ask for old returns more often than you would expect.