Shred, Scan, Store: Tax Records Purge


save-tax-records

In most cases, you have three years to amend your return and the IRS has three years to audit you. There are some exceptions. For example, if the IRS finds a major discrepancy like 25% or more of your income unreported, then they can audit 6 years back. Also, entities other than the IRS like creditors and insurance companies may want to see tax documents further back. To play it safe, hold on to tax records and supporting paperwork for at least seven years.

Shred: That doesn’t mean you necessarily need to keep everything. There are some documents you can probably shred right now.

shred receipts

  • ATM and deposit receipts — shred once you’ve compared them against your monthly bank statement.
  • Monthly bank statements — keep statements for one year, after that hold on to the annual statement and shred the rest (unless a statement has proof of a tax deduction).
  • Credit card bills — once they’ve been paid, shred them. Unless you need them to support a tax deduction like a charitable donation or childcare expense.
  • Monthly investment statements — hold on to annual statements and your most recent monthly statement, the rest can be shredded.
  • Pay stubs – shred all of your 2014 paystubs after you’ve compared them against your W-2, (which should have arrived in January).
  • Insurance policies – keep policies and statements until your renew or get a new one, then discard the old paperwork.
  • Receipts – most receipts can go to the shredder. Hold on to receipts if they were for a big purchase or could be needed to prove a deduction on your taxes.

Scan: Keep these papers in a secure location for a minimum of 7 years. The IRS also recommends scanning the paperwork so you have a backup electronic version. Store them on a portable storage device, you could easily take with you in the event you needed to evacuate your home.

file tax returns

  • Tax returns
  • Receipts (needed to prove claims made on tax returns)
  • Annual statements (bank, credit card, insurance, etc.)
  • Charitable donation records and written acknowledgement from charities
  • Mileage logs (if deducting miles driven for business or charitable purposes)
  • Retirement accounts
  • Annual investment statements
  • Proof that you filed your return – email confirmation if filed electronically or a certified/registered mail receipt from the post office
  • Proof of miscellaneous income (if they apply) – unemployment, gambling, alimony, jury duty, hobby incomes, prize money, etc.

Store: There are certain items where you want to make sure the originals are tucked away safely. Keep them in a fireproof safe and/or a safe deposit box. If you store your “forever” documents in a safe deposit box, make sure you keep a copy of them at home.

marriage license

Safe Deposit Box

  • Loan and mortgage documents
  • Estate paperwork (wills, trusts, health proxies, etc)
  • Birth Certificates
  • Death Certificates
  • Marriage license
  • Military service records
  • Social Security cards
  • Car titles (until you sell or get rid of the car)
  • House deed
  • Household inventory
  • Life insurance policy

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