IRS Publication 552

What Is IRS Publication 552?

A document published by the Internal Revenue Service (IRS) that provides information on which documents to keep on file and for how long, for tax filing purposes.

The IRS suggests keeping accurate records in order to identify sources of income, keep track of expenses, and be able to back up the information provided in the tax return. IRS Publication 552 does not indicate the method of record-keeping.

Understanding IRS Publication 552

Keeping accurate records and having those records readily accessible makes tax filing easier, and is essential for setting the appropriate cost basis for the sale of investments and property.

Basic records are those documents that everybody should keep. According to the IRS, these basic records include:

• W2s
• 1099s
• Tax Returns
• Bank statements
• Brokerage statements
• Paystubs
• Sales slips, receipts, or invoices for major purchases
• Canceled checks or proof of payment for major purchases
• Insurance policies
• Closing statements of real estate transactions
• Deeds
• Titles (e.g. to cars or boats)
• Vital records (e.g. birth certificates, marriage certificates, etc.)

Why Keep Good Records

The IRS highlights several reasons to adopt a good recordkeeping strategy in Publication 552, and not just for tax purposes. Other points include:

• Better budgeting of income and expenses
• Keeping track of cost basis on property, inheritances, or investments
• Applying for loans
• Applying for insurance

Records can be kept either in physical form (e.g., a checkbook or ledger) or as an electronic record using accounting or bookkeeping software.

How Long to Keep Records

The following information is directly from IRS.gov, which states how long to keep income tax returns. The years specified begin after the return was filed. Any returns filed before the due date are considered to have been filed on the due date.

1. Keep records for three years if situations (4), (5), and (6) below do not apply to you.
2. Keep records for three years from the date you filed your original return or two years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
3. Keep records for seven years if you file a claim for a loss from worthless securities or bad debt deduction.
4. Keep records for six years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
5. Keep records indefinitely if you do not file a return.
6. Keep records indefinitely if you file a fraudulent return.
7. Keep employment tax records for at least four years after the date that the tax becomes due or is paid, whichever is later