Tax Return: What It Is and How Long to Keep It

What is a tax return?

A tax return is a form filed with a tax authority that reports a taxpayer’s income, expenses, deductions, and credits so the authority can determine tax liability. Individuals in the U.S. typically file Form 1040 (or 1040‑SR); corporations file Form 1120 and partnerships file Form 1065. Various 1099 forms report non‑employment income. Form 4868 requests an automatic extension to file an individual return.

How tax returns work

• You report income (wages, dividends, self‑employment income, capital gains, royalties, etc.).
• You claim deductions (either the standard deduction or itemized deductions) to reduce taxable income.
• You apply tax credits to reduce tax owed dollar for dollar.
• The return shows whether you owe additional tax or are due a refund. Self‑employed taxpayers generally make quarterly estimated tax payments.

Ways to file
– File yourself (paper or e‑file), use tax software, or hire a preparer/accountant.
– The IRS also provides options such as the Direct File program in participating states.

Key sections of a tax return
– Income: W‑2s, 1099s and other income sources.
– Deductions: Retirement contributions, business expenses, mortgage interest, etc.
– Credits: Child tax credits, credits for the elderly or disabled, education credits, and others.
– Final calculation: Amount owed or refund.

Record retention: how long to keep returns and supporting documents

Keep tax returns and related records for as long as is necessary for your situation. The IRS general guidance:

• Keep records for at least 3 years from the date you filed the return (or 2 years from the date you paid the tax), whichever is later — standard baseline.
• Keep records for 7 years if you file a claim for a loss from worthless securities or a bad‑debt deduction.
• Keep records for 6 years if you omitted more than 25% of your gross income.
• Keep employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later.
• Keep records indefinitely if you did not file a return or if you filed a fraudulent return.

Practical tips:
– Treat the “filed date” as the return’s due date if you filed early.
– Retain documents that support items on your return (W‑2s, 1099s, receipts, canceled checks, bank statements, business records).
– If you discover an error, file an amended return promptly.

Other reasons to retain returns

You may need past tax returns for:
– Loan and mortgage applications (lenders commonly request multiple years).
– Rental applications or proof of income for subsidized housing.
– Financial aid (FAFSA may request tax information from recent years).
– Government assistance program eligibility.
– Opening certain financial or investment accounts.
– Financial planning and working with advisors.

Federal vs. state rules

State record‑retention rules can differ from federal recommendations. Check your state tax authority for specific guidance before discarding records.

Digital copies

Digital copies are generally acceptable if they are accurate, legible, securely stored, and can be authenticated if needed. Maintain backups and ensure files are not altered.

Bottom line

A tax return summarizes income, deductions, and credits to calculate taxes owed or refunds due. Keep returns and supporting documents for at least three years in most cases, but follow the longer retention periods listed above when they apply. Retain records longer when lenders, landlords, government programs, or your own financial planning needs require it.