How Long To Keep Your Parents’ Tax And Financial Records–And Your Own |
After my dad died, my siblings and I began sorting through the things he left behind. That included the expected things, like clothes and photographs, and the unexpected things, like financial records tucked into places we hadn’t known existed. When we were finally able to open the locked cubby behind my dad’s bed, my brother found, among other things, copies of my dad’s tax records dating back to the 1970s.
My dad had saved everything. What should we, his children, do with all that paper? After death, certain old records can be shredded. But be careful–both tax filing and tax debts live on after death. And death also creates some new records that will need to be saved.
A common example: If your parent owned a home at death, the property typically receives a step-up in basis to its fair market value as of the date of death. In that case, decades old records supporting the house’s purchase price and the improvements made to it may no longer be needed for tax purposes—as they still are for your own house.
But you will need to keep records supporting the stepped-up basis, such as the date-of-death appraisal or valuation, the deed, the death certificate, probate or trust distribution documents, and any inheritance or estate tax return, if one was filed. You should also keep records of any post-death improvements you make, including repairs. Even if the basis is not an issue at death, it could be important when the property is sold later. (Also, records of recent improvements should be saved, not because the IRS will want them, but because a prospective buyer might. A five-year-old roof or furnace? Those are selling points.)
Here’s a guide to what to keep for tax purposes, whether you’re dealing with a late parent’s records or your own.
The Statute of Limitations
The general rule is to hold on to your tax returns and supporting documentation until the period of limitations has run for the IRS to assess additional tax or for you to claim a refund. Supporting documentation for your tax returns includes not only your forms W-2 and 1099 but also credit card and other receipts, invoices, mileage logs, copies of checks, proofs of payment, and any other records that support items you reported or deductions you claimed on your return.
The standards here revolve around the statute of limitations, which is the legal deadline for you or the government to take a specific tax-related action. If you file a correct and timely tax return, the statute of limitations for the IRS to assess additional tax is generally three years from the date you filed the return. If you file before the due date, the return is generally treated as filed on the due date. Remember, you file your tax return after the tax year ends. That means, for example, the statute of limitations for a timely-filed 2025 tax return (the tax year ending December 31, 2025) begins to run on April 15, 2026. You'll want to keep those records until at least April 15, 2029.
If you apply for an extension and file your taxes after April 15, the three-year assessment period generally runs from the actual filing date, not April 15. If you file an amended return, the statute of limitations for your original tax return applies. It does not give you a brand new three-year assessment period for the original return.
For refund claims, the timing is slightly different. You generally have three years from the date you filed the original return or two years from the date you paid the tax, whichever is later, to file a claim for credit or refund.........