Tax Documents: What To Keep What To Shred
While most people now keep tax documents on their computers, some still keep the documents in paper files. The 2020 tax season was delayed by moving the filing date to July, so it’s tax season for those who did not file their taxes in April. As you file your current year’s tax documents, you should go through your files, especially paper files, to get ready to shred old tax documents and those you do not need to keep. If you do keep a paper file, be sure you keep it in a secure place. You should also have separate files for each year so that you can find the information when you need it.
How Long to Keep Tax Returns
Most people keep their tax returns for seven years. However, the IRS has just three years after your return’s due date or the date you file it to audit your return. Technically, you could throw most tax documents away after three years, but you may need certain documents after three years. How long to keep tax files, then?
Keep pay stubs and monthly brokerage statements for a year. However, if they match with your W-2s and 1099s, you can shred them as soon as you see that they match.
For three years, keep any document that supports income, credits claimed on your taxes, and deductions for at least three years after you file. These documents include W-2s, 1098 forms, 1099 forms, and receipts and checks showing donations to charities. You should also keep documentation of withdrawals from college savings plans and health savings accounts, and tax-deductible retirement savings plan contributions.
If you did not report at least 25 percent of your income, the IRS can audit you up to six years after you file your tax return. It’s easy to miss a 1099 if you get multiple 1099 forms. If you are self-employed, you should keep proof of income and business expense records for at least six years.
If you plan to write off worthless securities or a personal loan you made to a friend or relative – or other bad debts, you need to keep records related to the bad debt for at least seven years.
Finally, if you paid taxes to a foreign government and want to take a deduction or credit on the U.S. tax return, or if you claimed a credit and want to change your mind, you have 10 years to amend your return.
Securely Destroy Tax Information with Shredding
When it’s time to get rid of tax documents it’s not good enough to throw them away or shred them with a home shredder. For proper document destruction so thieves cannot put your documents together again, you need secure document destruction with a cross-cut shredder. Many documents, including tax documents, bank records, medical records and even insurance documents have information that you should keep out of the hands of thieves.
Instead of taking a chance that someone will get hold of the one piece of information that person needs to complete an identity theft profile for you, shred all documents, even those that have only your address on them.
Contact River Mill Data Management
Businesses and individuals should contact River Mill Data Management to discuss their shredding needs, whether they need to shred documents once a year or once a week. We can create a schedule to keep your documents secure.
Date Posted: August 14, 2020
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