What to Do With Your Records After You File Your Taxes
When you push the submit button to e-file your taxes, or drop your return in the mail, you feel a great sense of relief. Finally, you have finished your taxes for the year! While you have every right to feel relief (and accomplishment!), you should not forget that there is one additional thing you should do before washing your hands of this year’s tax return.
You should keep copies and records of your tax documents for a significant period of time after you file so that you can be sure that you will have the information you need in the event of an IRS inquiry or the dreaded audit.
But for how long?
The IRS recommends that you keep a copy of your return and other important information (like W-2s and 1099s) for a full 3 years before discarding them. In most cases, the IRS cannot look back more than 3 years prior to the year of the return. However, keep in mind that if you have underreported your income (by more than 25%), if you do not file or if you file a fraudulent return, there is no statute of limitations for how far back the IRS can “inquire”.
Why It Might Be Wise to Keep Records Longer Than 3 Years
1. Your state may require you to keep records longer than the IRS, so make sure you check that out before getting rid of any of your documentation.
2. If you make a big sale or purchase (house or other property)
3. The IRS recommends that you keep records on assets, like stocks or bonds and retirement accounts for 7 years.
Shred Them or Store Them?
If you have a large stack of tax documents that you are ready to dispose of, how should you get rid of them? Remember that your tax documents have loads of personal information like your social security number, address, and income, so you should plan to shred any printed tax documents that can be discarded.
However, if you are looking for the best way to store your tax documents, we recommend a fire and water proof safe. These can generally be purchased for as little as $30-$50 and can protect all of your important documents from harm. If you are tech savvy and also want to keep an electronic back up for these important documents, you can look into a cloud based data storage system. This is often a great way to keep your files organized and ready if they need to be found quickly.
Get Help If You Need It
If you have further questions about how long and how best to keep your tax documentation after you have filed your return, you can always ask for help. Success Tax Relief is a full service tax firm that can help taxpayers just like you come up with a system for keeping your documents, shredding them when necessary and we can be helpful in the event of an IRS audit. Success Tax Relief has been helping clients for more than 30 years on a wide variety of tax issues and our professionals are standing by ready to help you today.