How long should I keep tax records as a self-employed person?

Okay, here's a breakdown of how long to keep tax records as a freelancer/self-employed individual, as a US CPA:

**Generally, the IRS recommends keeping records for *at least* 3 years from the date you filed your return.** However, it's often wiser to keep them longer. Here's a more detailed guide:

* **3 Years from Filing Date:** This is the standard for most situations. If your return generally looks correct, a 3-year audit risk period is most common.

* *Example:* If you filed your 2023 taxes on April 15, 2024, keep records until April 15, 2027.

* **6 Years from Filing Date:** The IRS can go back six years if you *underreported* your income by more than 25%. This is a much bigger risk for 1099 income, as payers report that to the IRS too.

* *Example:* If you received $60,000 in 1099-NEC income but only reported $40,000, the IRS could audit back 6 years.

* **7 Years from Filing Date:** Keep records relating to employment taxes (if you have employees) for *at least* 7 years.

* **Indefinitely:** Certain records should be kept *permanently* (indefinitely). This includes:

* Records relating to property you purchased (like a home office or equipment). Keep these as long as you own the asset *plus* the appropriate period after disposal. This is tied to capital gains calculations.

* Records for retirement plans. Keep contribution and distribution records.

**What Records Should You Keep?**

* **Income Records:** 1099-NEC/MISC forms, invoices, bank statements showing deposits, payment records.

* **Expense Records:** Receipts, invoices, bank/credit card statements, mileage logs (for vehicle expenses), documentation for deductions claimed.

* **Tax Returns:** Copies of filed federal and state tax returns. If you amended a return, keep the original <u>and</u> the amended return.

* **Self-Employment Tax Records:** Calculations for self-employment tax (Schedule SE).

**Best Practice:** I recommend keeping records for **at least 7 years**. It's a small effort for peace of mind. Digital storage (scanned receipts, cloud storage) is perfectly acceptable.

⚠️ Disclaimer: This is for educational purposes only. Always consult a licensed CPA for personalized advice.