Tidy desk, tidy mind. Having a clean office means not saving every receipt since 1994. But how do you know where to draw the line? While you’re not looking for clutter, you’re also not looking to be a deer in headlights in the event you would be audited. How far back should you be saving tax documents? What tax documents should you be saving? Does it matter if you save the electronic or paper version? Find out now.
How Long Should I Save Tax Documents?
Generally, you should keep your tax records for at least 3 years past the date of the document. There are a few situations where you should keep them longer. Here’s how long the IRS says you should keep them:
- Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
- Keep records for 3 years from the date you filed your original return or 2 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.
- Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
- Keep records for 6 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.
- Keep records indefinitely if you do not file a return.
- Keep records indefinitely if you file a fraudulent return.
- Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
What Documents Do I Need to Save?
Hold onto your returns, records relating to your 401(k), W-2s, 1099s, and any supporting forms. Chances are you won’t be audited. But in the event you are, you certainly want to be ready. Anything related to your home or property you should keep forever.
Storing or Getting Rid of Your Tax Documents
Whether you choose to store paper or digital copies is simply up to you. If you go with paper copies, it’s recommended to keep them in a fire-proof safe. The IRS is not the only one who would want to see copies of such documents, your insurance would too in the event of an emergency. So it’s best to have these protected. If you opt to store digital copies instead, keep them on a high-quality hard drive or in the cloud (or both). While digital copies are often easier to store and organize, you need to be mindful of saving the right ones. It’s easy to remember to store a certain document when it shows up in your mailbox. It’s much more difficult when you’re signed on for “Paperless” and have to manually retrieve a copy yourself. Put together a list of the documents you intend on saving and make sure you have each of them scanned or downloaded.
When you do get rid of your tax documents, be sure to shred them. Tax returns are riddled with sensitive information that you don’t want out in the open.
Expert Tax Assistance
Just because you have the rules laid out in front of you doesn’t make them easy to follow. Talk to the experts about exactly how and how long you should be storing your tax documents. We’ll put together a tax plan tailored to your situation, circumstances, and preferences. Whether you’re filing for yourself, your family, or your business, we have the tools to help you.