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 saved 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
- 1099 forms
- 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
- 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
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.