Did you know the average American spends 13 hours every year preparing federal tax returns?
For small business owners, that figure almost doubles to 24 hours!
For most people, three years is a good time frame, but it could be much longer in many situations.
Plus, it can often be a good idea to hold onto records longer than the required time for other non-tax reasons.
Keep reading to find out exactly how long you should keep your tax records in your situation.
The answer may surprise you!
As always, the IRS has some slightly confusing terminology around how to measure the amount of time you should keep tax returns.
What is the Period of Limitations?
According to the IRS, the period of limitations is the “period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax.”
How Long to Keep Tax Returns
For the actual tax return itself, the IRS advises keeping them forever. I would 100% agree with that.
Especially in the digital age, where everything can be saved on a hard drive or backed up in the cloud, there’s no reason to toss your actual tax returns.
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