With this year’s filing date approaching, we’re recapping the rules for tax season recordkeeping, as well as the best ways to store and dispose of personal documents. This goes without saying, but always make sure to follow all IRS guidance and all tax record rules when it comes to recordkeeping.
Keep Records For At Least 3 Years
The general recommendation is to keep tax returns and all corresponding paperwork and records for at least three years after filing your return, which is the length of time the IRS has to audit you. However, keep in mind that the IRS can request records for up to six years after filing if there is a suspicion that someone failed to report 25% or more of their gross income on their income tax returns. The agency never closes the door on an audit if it suspects fraud.
Whether you live in North Carolina or elsewhere, it is important to check with your state about state income tax returns. Some states may recommend keeping your records for longer than the federal government’s required three years.
Store Records In A Safe Place
A fireproof box is always an option for storing physical copies of important documents, including tax returns, wills, deeds, etc. You can scan and store your documents digitally as well in a secure electronic environment. Loss, damage or destruction is less likely if you aren’t relying on one physical copy. However, make sure the electronic environment is very secure and protected.
Properly Dispose Of Old Documents
When cleaning out and getting rid of old documents you no longer need to keep on file, make sure to shred them. Never throw copies of sensitive personal documents in the trash since your information could be compromised. A cross-cut shredder is a great option if you have access to one.
Tax season can be a hectic time, but any extra time you take to file your documents in an organized way will make your life much easier later on if you ever need to access them.
