Client Record Retention Requirements

The retention period for client records depends on the type of record and the circumstances involved.

General Income Tax Records:

For most situations, you should keep records for three years after the return is filed (or the due date, whichever is later) [1]. However, this period extends to six years if the client omits reportable income exceeding 25% of gross income [1]. If the client files a fraudulent return or doesn't file a return at all, there is no statute of limitations, meaning records should be kept indefinitely [2]. For claims involving worthless securities or bad debt deductions, keep records for seven years after filing.

Employment Tax Records:

Employment tax records must be retained for at least four years after the date the tax becomes due or is paid, whichever is later [1].

Asset Records:

Records relating to business or investment assets should be kept until the statute of limitations expires for the year in which the asset is disposed of in a taxable disposition [2]. This means if an asset is sold in 2024, you would keep those records until at least 2028 (three years after the 2024 return due date).

E-file Records:

Forms 8878 and 8879 must be retained for three years from the due date of the return or the IRS received date, whichever is later [3].