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Tax Documents – What to Shred and What to Keep

May 01, 2023

You may have already filed your taxes, but that doesn't mean you're done!

Once you've filed, the hardest part is behind you. But, proper storage and proper discarding of pertinent papers are an essential part of your tax filing. Tax papers include a list of personal information like your social security number, address, and financial account details; when combined can be accessible to scammers and heighten the risk of identity theft. Investing in a shredder can help you properly dispose of what you don't need, but what should you keep? Here's what you need to know.

Abide by the three-year rule for most paperwork. In most cases, you should keep tax documents — including the copy of your return and any papers that went into the filing, like W2s, 1099s, receipts, additional write-off paperwork, and property paperwork, including stocks and equipment — for three years. Taxpayers traditionally have three years to submit for and claim a refund, and the IRS tends to include returns filed within the last three years in audits. For more significant errors, they may go back a bit further, but you are usually in the clear by six years.

Keep retirement withdrawal papers for seven years. If you withdrew money from a retirement account, keep those records for seven years.

Hold onto fraudulent, refused, or forgotten tax returns into perpetuity. The IRS has no statute of limitations on audits for these situations, so keep this documentation forever.

A waterproof and fireproof safe is a good start for the tax documents you need to hold on to; this is also a great place to keep other important documents. Backing them up on your computer — with robust security software to keep them private — is also essential. We hope these tips help to sift through what to keep and what to shred.