Tax records – what to save – for how long

What tax files to save

I wished I could throw out all of those stacks of files and papers that are the tax records that I savedĀ  every year. So I took some time to think about what I could and couldn’t shred.

Our dear IRS tells us that:

  • It reserves the right to question your tax return for 3 years.
  • It maintains the right for six years to audit your returns based on undeclared income.
  • So save records for seven years to be safe

Most important tax records to save:

  • Tax returns
  • Proof of any deduction or credit expenses that are used on your return
  • Sales slips,
  • W-2 forms
  • Receipts
  • 1099 forms
  • Invoices
  • Child care expenses
  • Credit card statements especially for deductible items
  • Brokerage statements
  • Bank statements
  • Real estate taxes
  • Mortgage interest
  • Proofs of payment especially for large and deductible purchases
  • Cancelled checks (Some banks only offer online images but they can be printed)
  • Charitable contributions – charitable donations
  • Alimony Payments
  • IRA retirement plan records
  • Annuities
  • Stock and Investment records
  • All types of retirement fund and insurance records
  • Be sure to keep records from retirement plans where you are paying tax up front because you will have to have proof of this for when you take your benefit payments

Scan documents

A good suggestion is to scan all documents and save the info on disc and/or in a cloud storage.
You can put it on a thumb drive etc and keep it in a fireproof lock box or safety deposit box in a bank.
My goal was to minimize the amount of real estate that the file cabinets and stacks of file folders are taking up.

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