One of the greatest joys of tax season is the disposing of another year’s tax returns and supporting documents. But how long should they be kept?
I’ve always been an advocate of saving tax documents for seven years, because that is what my accountant colleagues recommend — though the IRS only requires us to keep three years’ worth of tax returns and supporting documents. Keep in mind that the IRS has three years to audit your returns, so three years is the absolute minimum.
There are ways to lessen the burden of having to store these documents. Our office has been paper free for many years thanks, in part, to great technology that allows us to digitize even the most oddly shaped pieces of paper.
If you haven’t gone paperless, then you’re going to need a shredder. We always recommend cross-cut shredders as opposed to the ones that only cut lengthwise. Shredding services can come to you, and are generally trusted by my friends and colleagues.
The usefulness of a lot of documentation will expire when the thing it accompanies gets thrown out or recycled, or maybe even before. I recommend keeping manuals and instructions for the life of the product, just in case there is a recall or something else that requires proof of purchase.
If you’ve refinanced your home or bought a new home, you’ll be holding on to those documents “for the duration.” Get yourself a good safe that is fire resistant and keep your forever — or 30-year — documents in there. (Also any special brownies!)
No one wants to pay rent for a stack of paper taking up space in a closet somewhere, but that seems to be the deal we made with the government. JHA literally makes a business out of helping clients manage their stacks of papers — if you’d like to learn how we can help you, contact us.
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