IRS record-keeping requirements are not as complex as most small business owners assume. The rules are built around one principle: keep records long enough to support any item on any tax return you file.
The Basic Rule
Keep records supporting your tax return for at least three years from the date you filed the return or two years from the date you paid the tax, whichever is later. This is the standard statute of limitations for IRS assessment. If you omit more than 25% of your gross income from a return, the statute extends to six years.
Employment Tax Records
Employment tax records—W-2s, W-4s, I-9s, records of withholding and deposits—should be kept for at least four years after the tax becomes due or is paid. Property records should be kept until you dispose of the property plus the standard three-year period.
Key Takeaways
- Minimum retention for most tax records: three years from filing or two years from payment, whichever is later.
- Employment tax records: four years minimum.
- Property and asset records: life of the property plus three years after disposal.
