Monday, April 18, 2016

Warning: Don't Lose These Tax Documents After You File

Heads up, taxpayers: today’s the last day to file your personal income taxes (unless you’re in Maine and Massachusetts, you lucky ducks have until tomorrow). So before we continue, if you think you need some more time to file, head on over to really quick and e-file Form 4868 for a six-month extension.

*Jeopardy theme music*

Alright, glad to have you back. Now, onto the subject of the day here at ExpressIRSForms: tax document retention. In other words, what tax records should you keep - and how long should you keep them - after you file?

Generally, taxpayers need to keep a copy of their tax returns and supporting documents for at least three years after the filing year. The IRS recommends this three-year retention period because that’s how long they have to initiate an audit of that tax year (that’s also how long you have to amend that return). But keep in mind that they have six years to initiate an audit in cases of fraud. If you’re already playing fast and loose with the IRS, it’s unlikely you’ll keep the paperwork lying around; but if you do, that’s how long you should.

“Enrolled agents say keep all tax records for seven years just to be safe,” said Kim Lankford, of Kiplinger’s Personal Finance magazine in an interview with Patricia Sabatini. Even if you don’t anticipate an audit, keeping your tax documents can help you in the long run. Whether they’re helping you complete future returns, or successfully helping to contest Social Security benefits (an example Ms. Lankford sites), retained tax documents can really come in handy.

Information You Can Use on Your Next Return
Keeping previous tax records and other documents you collect throughout the year can not only help with your tax preparation time each year, but it can help save you money on your taxes. Throughout the year, make sure you hold onto documents and information relating to:
  • Income from wages, dividends, interest, or business: W-2s, 1099s, K-1s, bank statements, brokerage statements, etc.
  • Deductions and credits (child care expenses, dental and medical expenses, use of the home for business purposes, charitable gifts, car sales tax, alimony): receipts, invoices, mileage logs, bank/credit card statements, etc.
  • Home and property: closing statements, invoices, proof of payment, insurance records, receipts for improvements
  • Investments: 1099s and 2439s, brokerage statements, mutual fund statements

The Bottom Line: What to Keep for How Long
The only thing you’ll really, legally need your tax documents for is in the event of an audit. The helping-you-complete-future-returns part is just gravy. Actual tax returns, like your 1040 and its schedules, or your W-2, you should hold onto indefinitely. Everything else, follow this general timeline for document retention:
  • Three years: tax return forms and schedules plus all info to support what you claimed on your return (like records related to property, investments, or business assets)
  • Four years: state tax information (most states have an additional year to initiate an audit)
  • Six years: W-2, 1099, etc. forms (the IRS has six years to contact you about failed reported income)
  • Seven years: information regarding loss from worthless securities or bad debts

For questions on your personal tax return, we’ll try to do the best we can, but you might be better off contacting a CPA or the IRS directly (1-800-829-1040). But for e-filing your 1099s, W-2s, ACA Forms, and W-9s, we’re happy to help! Just give us a call Monday through Friday, 9:00 a.m. to 6:00 p.m. EST, at 1-704-83-2270, or send us an email at

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