Losing a loved one is emotionally challenging, and the financial paperwork they leave behind only adds to the stress. Among the many documents you may need to sort through, tax returns are often overlooked. But before you toss them in the shredder, knowing how long to keep tax returns after death is crucial for protecting yourself from potential legal and financial issues.

Did you know the IRS typically requires tax records to be kept for at least three years? However, certain situations, like unresolved tax liabilities or estate disputes, may require you to keep them longer. In this guide, we’ll break down exactly what documents to keep, for how long, and how to ensure compliance with IRS regulations.

If you’re managing a loved one’s estate and feeling overwhelmed, Simplicity Financial’s tax preparation services can help make the process easier.

Here’s How Long to Keep Tax Returns After Death

The IRS has different retention requirements based on the complexity of the estate and potential tax obligations. Here’s a general breakdown:

Minimum Requirement: Keep tax returns for at least 3 years after filing.
If underreported income exceeds 25% of total income: Keep records for 6 years.
If fraud is suspected or estate disputes arise: Keep records indefinitely.

If you’re unsure how long to keep estate tax records, it’s always safer to keep them longer than necessary to prevent future complications.

State-Specific Tax Retention Requirements

While the IRS sets federal guidelines, state tax agencies may have different retention requirements. For example, California’s Franchise Tax Board may request documentation beyond the federal standard in certain cases. You can check your state’s specific tax policies for more details.

Do You Know How Long to Keep Estate and Trust Documents?

Do You Know How Long to Keep Estate and Trust Documents

Managing estate and trust documents requires long-term organization. Here’s what you need to know:

1. Estate Records

  • Estate tax returns (Form 706): Keep for at least 7 years after filing.
  • Wills and probate court documents: Keep permanently.
  • Real estate property deeds: Keep permanently.

2. Trust Documents

  • If the trust is still active: Keep all records permanently.
  • If the trust is dissolved: Retain for at least 7 years in case of future disputes.

If you need help handling financial documents related to trusts and estates, our fractional CFO services can assist with financial planning and compliance.

Which Documents Should You Keep After Someone Dies?

Sorting through paperwork can be overwhelming, but keeping essential financial records can protect you from future tax or legal issues.

Essential Documents to Keep:

📌 Final tax returns (Form 1040): Keep for at least 3 years after filing.
📌 Estate tax returns (Form 706): Retain for 7 years.
📌 Real estate deeds & mortgage records: Keep permanently.
📌 Bank statements & investment accounts: Hold for at least 7 years.
📌 Trust documents & inheritance records: Keep indefinitely.

Keeping these documents organized will make future filings, audits, and property sales much smoother.

Wondering When to Shred Documents of a Deceased Person?

When to Shred Documents of a Deceased Person

Shredding sensitive documents protects against identity theft, but only after confirming they are no longer needed.

Shred Immediately:

✔ Expired credit cards
✔ Utility bills (unless estate-related)
✔ Non-financial personal documents

Shred After 3 Years:

✔ Medical bills
✔ Non-essential bank statements

Shred After 7+ Years:

✔ Estate & tax records (unless related to real estate or trusts)

If you’re unsure what to keep, our bookkeeping experts can help you stay organized and compliant.

Managing Tax Returns for a Deceased Parent: You Can Do This

Managing Tax Returns for a Deceased Parent

If you’re handling tax returns for a deceased parent, follow these best practices:

  • If the estate is closed: Keep records for at least 3 years.
  • If real estate, trusts, or investments are involved: Keep for 7 years or longer.
  • If an IRS audit is possible: Retain records indefinitely.

Handling a loved one’s taxes can be complex, and mistakes can be costly. Our tax preparation services ensure your estate filings are accurate and stress-free.

Handling Tax Records for Estates in California

For estates involving inheritance tax, real estate, or trusts, our inheritance tax guide can help you navigate California’s tax laws.

If you’re managing tax filings after a loved one’s passing, understanding how state and federal tax laws impact estate planning is crucial. In addition to inheritance laws, sales tax, property tax, and final income tax filings can all affect an estate’s financial standing. Many executors don’t realize how complex this process can be, leading to missed deadlines and unexpected liabilities.

According to the IRS, California had the highest number of estate tax returns filed in 2022. Simplicity Financial understands the financial burdens that follow mourning periods and we are here to help. Whether you are experiencing a loss, or just planning for the future, we want to highlight the importance of thorough record-keeping and professional tax guidance when handling estate-related taxes.

What Tax Filings Are Necessary for an Estate?

When managing an estate in California, you may need to file:

  • Final Individual Income Tax Return (Form 1040) – Covers the deceased’s earnings up to the date of death.
  • Estate Income Tax Return (Form 1041) – Required if the estate generates more than $600 in annual income before assets are fully distributed.
  • Estate Tax Return (Form 706) – Necessary if the total taxable estate exceeds the federal exemption limit, which is $13.61 million for 2024. See the limits and instructions here if you’d like.
  • Property Tax Filings – California’s Proposition 19 affects how inherited properties are taxed, particularly when transferred to beneficiaries.

If the deceased owned a business or rental properties, additional sales tax obligations might apply. Understanding local tax laws is especially critical for estates with Riverside County business assets, as sales tax rates vary by region. Learn more about Riverside County sales tax requirements to ensure compliance.

How Tax Professionals Can Simplify Estate Filings

How Tax Professionals Can Simplify Estate Filings

Filing taxes for an estate is very different from filing a standard personal return. If you’re not familiar with IRS estate tax requirements, it can quickly become overwhelming.

Here’s how working with a qualified tax professional can help:

1️⃣ Accurate Filing & Compliance: Ensure that all state and federal tax obligations are met.
2️⃣ Maximize Deductions & Credits: Identify opportunities to minimize tax liability for the estate.
3️⃣ Reduce Audit Risks: Properly filed returns are less likely to trigger IRS scrutiny.
4️⃣ Ongoing Financial Guidance: If the estate includes business assets or rental properties, continued financial management may be necessary.

If you’re unsure about tax obligations after a loved one’s passing, our blog offers expert resources to guide you.

Why Professional Tax Help Matters

Filing an estate tax return can be time-consuming and complex, and mistakes may lead to penalties or audits. If you’re wondering about the average cost of tax preparation by a CPA, investing in professional assistance often saves money in the long run by maximizing deductions and avoiding errors.

Final Thoughts: Get Expert Help with Estate Tax Records

Sorting through a loved one’s financial records can be overwhelming, but following the right tax guidelines ensures legal and financial protection.

Keep tax records for at least 3-7 years
Retain estate & trust documents indefinitely
Shred unnecessary records securely

For professional guidance on estate taxes and bookkeeping, contact us today and let our experts handle the paperwork, so you can focus on what matters most.

FAQ: How Long to Keep Tax Returns After Death?

FAQ How Long to Keep Tax Returns After Death

How long to keep tax records after death?

Keep tax records for at least 3 years after filing, or 7 years if estate taxes were filed. If real estate or business assets are involved, keep records indefinitely.

How long to keep bank statements after death?

Bank statements should be retained for at least 7 years, especially if they relate to estate settlement, real estate holdings, or tax audits.

Should I shred documents of a deceased person?

Yes, but only after ensuring they are no longer needed for legal or tax purposes. Shred sensitive documents like bank statements and medical records to prevent identity theft.

How long to keep deceased parents’ tax returns?

If there are no outstanding tax issues, keep records for at least 3 years. If the estate involves real estate, investments, or trusts, retain them for at least 7 years.

Where can I get professional help with estate tax records?

For expert assistance, contact Simplicity Financial today. Our team specializes in estate tax preparation and financial planning.

Get a personal consultation.

Call us today at (951) 444-1895

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