It's that time of year again-tax season! If you're like most people, you're probably scrambling to find all of your paperwork and trying to remember where you stashed those 1099s. But one question that often comes up during tax season is: how long do you need to keep your state tax records? This can be a confusing question because the answer depends on your individual situation. In this blog post, we will break down the guidelines for how long you should keep state tax records. Keep reading to learn more!
Period of Limitations that apply to income tax returns
The first thing you need to know is that there is something called a period of limitations. This is the amount of time that the IRS has to audit your tax return or make any changes. The period of limitations for most federal taxes is three years from the date you filed your return or two years from the date you paid the tax, whichever is later. However, there are a few exceptions to this rule.
If you file a fraudulent return, the IRS has an unlimited amount of time to audit your taxes. Additionally, if you neglect to file a return at all, the IRS also has an unlimited amount of time to come after you for unpaid taxes. So if you're ever thinking about skipping out on filing your taxes, just remember that the IRS will eventually catch up to you!
Now that we've covered the period of limitations, let's talk about how long you should keep your state tax records. The answer to this question depends on the statute of limitations in your state. The statute of limitations is the amount of time that the state has to audit your tax return or make any changes. Just like with federal taxes, there are a few exceptions to this rule.
For example, some states have a longer statute of limitations for taxpayers who owe back taxes. Additionally, if you file a fraudulent return, most states will have an unlimited amount of time to audit your taxes. So if you're ever thinking about skipping out on filing your taxes, just remember that the state will eventually catch up to you!
Are the records connected to the property?
Another thing to consider when you're trying to determine how long to keep your state tax records is whether or not the records are connected to the property. For example, if you own a home and you're claiming the mortgage interest deduction, you'll need to keep your mortgage statements and interest paid records for as long as you own the home.
If you sell the home, you'll need to keep the records for at least three years after you sell the property. This is because the IRS can audit your return for up to three years after you file it. So if you have any questions about whether or not you should keep a particular record, just ask yourself if the record is connected to the property.
How long should you keep tax records in general?
Now that we've gone over some specific things to consider, let's talk about how long you should keep your state tax records in general. As a rule of thumb, you should keep your records for at least three years after you file your return. This will give you plenty of time in case you need to go back and look at something.
If you have any records that are connected to the property, you should keep those for as long as you own the property. And if you sell the property, you should keep the records for at least three years after you sell it. Following these guidelines will help you ensure that you have the tax records you need in case of an audit.
What should I do with my records for non-tax purposes?
While we're on the topic of tax records, let's talk about what you should do with your records for non-tax purposes. You may have records that you need for personal reasons, such as your mortgage statements or home improvement receipts. While you don't need to keep these records for tax purposes, you may want to hold onto them for your own records.
If you're not sure whether or not you should keep a particular record, just ask yourself if you think you might need it in the future. If the answer is yes, then hang onto it! But if you don't think you'll ever need it again, then you can probably safely get rid of it.
The bottom line
When it comes to how long to keep your state tax records, the answer isn't always cut and dry. There are a lot of factors to consider, including the period of limitations and whether or not the records are connected to the property. As a general rule of thumb, you should keep your records for at least three years after you file your return. Thanks for reading.
