The Document Retention Guide to Tax Season – What to Keep and What to Shred
(Updated September 2024)
Tax season can be stressful, but managing your paperwork doesn’t have to be. Record Storage Systems offers a simple solution: a clear document retention guide. This guide helps you identify which tax documents to keep and which ones can be securely shredded. By following these guidelines, you’ll free up valuable storage space, minimize clutter, and ensure you’re adhering to IRS regulations. Don’t let tax season paperwork overwhelm you – take control and streamline the process with a clear retention strategy and secure disposal options.
It can be confusing to determine which records to keep and which to destroy. The IRS website lays out record retention guidelines for tax documents and financial information. Here are the record retention periods they suggest:
- Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
- Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
- Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
- Keep records indefinitely if you do not file a return.
- Keep employment tax records for at least 4 years after the date that the taxes become due or are paid, whichever is later.
- Generally, keep records relating to property until the period of limitations expires for the year in which you dispose of the property. You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.
Another general rule of thumb for tax document retention includes keeping pertinent information such as birth certificates, marriage licenses, divorce records, military papers, estate planning documents, life insurance records, and bank account information for an indefinite amount of time – or most likely forever.
Regarding business records, it makes sense to keep a final copy of your business’ tax returns and any communications with the IRS permanently. It’s okay to be conservative with your document retention and keep financial statements and general business ledgers permanently also – even though it’s not required.
While you can safely discard unnecessary documents, those containing personally identifiable information, such as tax records, bank statements, or insurance details, pose a significant identity theft risk if not disposed of securely. Partner with a professional document shredding service to ensure your confidential information is permanently destroyed and receive a Certificate of Destruction as proof.
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