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Store or Shred? This Is How Long You Should Keep Your Tax Records

Posted May 20, 2016

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“Now that my income tax return has been filed and the filing deadline has passed, I can shred all my tax documents, right?” Wrong!

After you file your tax return, you should keep your tax return and records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out. The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax. When you want to amend your return to reduce tax or if the IRS comes knocking and starts questioning your returns, you wouldn’t want to be left empty handed!

For most items of income, deduction or credit, the period of limitations is three years. Therefore, as a general rule, you should keep your tax return and supporting documentstax records (e.g., W-2s, mileage logs, etc.) for a period of at least three years from the date you filed or the due date of your tax return, whichever is later. However, there are some exceptions.

In some cases, you may need to hang onto your records for longer than three years. For example, if you file a claim for a loss from worthless securities or bad debt deduction, you must keep your records for seven years. Additionally, if you amortize, depreciate, or buy or sell property, you should keep property records until the statute of limitations expires for the year in which you dispose of the property.

When your records are no longer needed for tax purposes, be sure to check if you need them for other purposes before your discard them. For instance, your insurance company or creditors may require you to keep your records longer than the IRS does. When it comes time to discard your tax documents, make sure to shred them to keep your sensitive information out of the hands of identity thieves!





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