Tax Document Hoarders: How Long Should I Keep My Tax Records?

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Tax Document Hoarders: How Long Should I Keep My Tax Records?

In Taxes on May 3, 2011 by Sufen Wang Tagged: hoarding, irs, recordkeeping, tax documents

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We’re now two weeks removed from Tax Day 2011, and, yet, there are still questions regarding our taxes lingering in our minds. Last week, we shared with you when you should expect your tax refund, and, today, we’re going to talk about another hot tax topic: document storage.

People are often conflicted when it comes to deciding whether to keep or throw away a tax-related document. On the one hand, they don’t want to throw away any important documents. On the other hand, they don’t want to wake up one day, trapped under a pile of tax documents that they didn’t really need.

In the battle between good recordkeeping and good housekeeping, it’s important to know which documents you really need to keep, and which ones you can actually afford to toss. But it’s discerning the difference that’s the hard part. Fortunately, the IRS has put together a little article to help you decide what you should keep and what you should toss.

Here are some of the highlights:

If you did not report income and it’s more than 25% of your filed gross income, keep records for 6 years.

If you filed a fraudulent return, keep records indefinitely.

If you did not file a return, keep records indefinitely.

If none of the first three apply to you (and let’s hope that they don’t!) and you owe additional tax, keep records for 3 years.

If you file a claim for a credit or refund after you file your return, keep records for 3 years from the date you filed your original return or 2 years from the date you filed the tax, whichever is later.

If you file a claim for a loss from worthless securities or a bad debt deduction, keep records for 7 years.

Keep all employment tax records for 4 years from the date that the tax was either due or paid, whichever is later.

Keep all documents related to assets (like property) until the period of limitations expires for the year in which you disposed of the property in a taxable disposition.

Keep non-tax-related documents until you’re sure that you don’t need them for other purposes. An insurance company might require you to keep a document for longer than the IRS might.

Always keep copies of your filed tax returns. They might come in handy if you ever need to file an amended return.

As a rule of thumb, if you’re not confident that you can throw it out, you probably shouldn’t. It’s better safe than sorry. Just be sure to invest in some neat and tidy storage organizers so that you don’t wind up trapped under a pile of your tax documents. Many people complain that their taxes are killing them, but it shouldn’t happen in this way.

On the Money,
Sufen Wang
Wang Solutions

Wang Solutions

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