How Long to Keep Tax Returns and Other Documents


March 14, 2018

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By Ellise Pierce

Whether it's shoe boxes, plastic bags, or stuffed filing cabinets, we all have different ways of keeping track of documents the IRS requires. It seems that just as many of us have different understandings as to how long we need to hang on to these documents—and which ones. Thankfully, there's some straight up guidance that can help you decide.

"It depends on your tax situation," Marie Kelly, a certified public accountant in Dallas, says. Kelly's CPA firm focuses on tax advisory services for individuals and entrepreneurs. "If it is simple and you just have a W-2, after three years, you may be safe to dispose of your tax documents. However, if you're self-employed, own a small business, or have itemized deductions, you probably want to keep your documents for seven years."

But which documents do you really have to keep, and which ones can you safely toss? It's simple. If you deducted it, then you should be ready to prove it.

"Under audit, the IRS can request copies of your documentation for income and deductions," Kelly says. "Therefore, you should keep anything that's been reported on your tax return that you would have to substantiate."

Whether your papers are in a box in the attic or digitally filed in the cloud or on a flash drive, here's a list of some key documents to keep.

Old Tax Returns

You'll need something to show that you filed your annual return, so keep the certified letter receipt if you snail-mailed. Hold onto the document that says "filed and accepted by the IRS" if you sent in your return electronically.

Stock Purchases

Keep records of your stock trades, Kelly says. If you're buying and selling stocks, you may have to pay taxes to the IRS. Sale price is always reported, but your purchase price may not be available to the reporting brokerage. So, it behooves you to keep your originals.

Annual Bank Interest Statements

By law, the interest incomes from checking and savings accounts are reported to the IRS. Should the bank-reported amount be in error, it's up to you to prove otherwise. "If you don't have the documents, you have to go with what's reported to the IRS," Kelly says.

Home & Property Documents

There are some deductions available to homeowners, and you must have the documentation saved if you claim them. "You can deduct your property taxes paid each year as long as you have the receipt proving payment," Kelly says. If you buy, sell, or refinance your house, keep your closing statements, mortgage documents, and receipts for any home improvements.

Charitable Giving

If you take an itemized deduction for donations of goods (old clothes, furniture, etc.), you have to show what you gave, its worth, and a receipt from the charity. If you make a donation of more than $250 in cash, you need a receipt, and you should keep it.

Meals and Entertainment

"If a deduction is taken for business meals and entertainment, keep the receipt and document the business purpose, who was in attendance, and a description of the business discussion," Kelly says.

Tax season is a good time to reevaluate your finances, including your insurance coverage. Get a free quote for auto, homeowners, or renters insurance on to see how much you could save.

Originally published on GEICO.

Opinions expressed by the author are not necessarily those of WITI.

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