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Is it safe to throw out tax documents?
Old 06-19-2011, 02:46 PM   #1
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Is it safe to throw out tax documents?

I am contemplating shredding all my tax documents that are in paper form. I would only keep a digital copy (and backup) of the return, the W2, INT, DIV and 1099 forms, etc. I googled and did not find any answer to the question below.

If audited would the IRS accept reprinted versions of the W2/INT/DIV/1099 forms?

EDIT: I spent a while reading on IRS.gov and it talks a lot about what kind of records to keep but does not address whether digital is acceptable.
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Old 06-19-2011, 03:26 PM   #2
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It sounds complicated:
Quote:
The original hard copy books and records may be destroyed provided that the electronic storage system has been tested to establish that the hard copy books and records are being reproduced in compliance with IRS requirements for an electronic storage system and procedures are established to ensure continued compliance with all applicable rules and regulations. You still have the responsibility of retaining any other books and records that are required to be retained.

The IRS may test your electronic storage system, including the equipment used, indexing methodology, software and retrieval capabilities. This test is not considered an examination and the results must be shared with you. If your electronic storage system meets the requirements mentioned earlier, you will be in compliance. If not, you may be subject to penalties for non-compliance, unless you continue to maintain your original hard copy books and records in a manner that allows you and the IRS to determine your correct tax.
Publication 552 (01/2011), Recordkeeping for Individuals
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Old 06-19-2011, 03:26 PM   #3
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Good question. I just finished digitizing our file cabinet and the only documents left in there are tax returns and supporting documents.
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Old 06-19-2011, 03:41 PM   #4
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I've heard that IRS tax returns should be kept for seven years. They can go back ten years if fraud or such thing can be suspected. I just keep everything ten years and that includes all documentation, receipts, notes, etc. Can't go wrong that way. I have a file cabinet where I keep all those tax returns, medical records and documents pertaining to the purchase and sale of real estate. Also keep all the owners manuals on appliances, garage door openers, alarm systems, TV's, extended warranties, etc. Had it for years and know where everything is lo cated. Also contains every issue of Consumers Reports for reference. I'm a saver of documents.
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Old 06-19-2011, 03:51 PM   #5
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Good question. I just finished digitizing our file cabinet and the only documents left in there are tax returns and supporting documents.
Exact same situation that I am in. I digitized everything and love the results.

Now I only have about 1.5 inches of paper and it's all tax returns.

Would love to toss those but my fear is if audited they might make me go to my employer for a real W2, or to brokers for a copy of 1099s.

I'm hoping someone on the board might have survived an audit using only digital.
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Old 06-20-2011, 10:08 AM   #6
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From what I've read and been told, IRS and Tax documents should be kept on file for at least 7 years after they are used.
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Old 06-20-2011, 10:20 AM   #7
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The statute of limitations does not apply in the case of a false or fraudulent return with intent to evade any tax. See section 6501(c)(1) of the Code and section 301.6501(c)-1 of the regulations.

If you are honest, you can toss after 7 years.
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Old 06-20-2011, 12:42 PM   #8
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Quote:
Originally Posted by Zero View Post
I am contemplating shredding all my tax documents that are in paper form. I would only keep a digital copy (and backup) of the return, the W2, INT, DIV and 1099 forms, etc. I googled and did not find any answer to the question below.

If audited would the IRS accept reprinted versions of the W2/INT/DIV/1099 forms?

EDIT: I spent a while reading on IRS.gov and it talks a lot about what kind of records to keep but does not address whether digital is acceptable.
You should have no problem. The IRS already received these docs in original form directly from the financial institutions.

You should also be able to keep in digital form other financial records not sent to the IRS, such as purchase price for investments and digital copies of checks and credit card transactions.

A problem might arise if deductions are being challenged and you only have digital copies of the transactions and the auditor was intent on disallowing.
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Old 06-20-2011, 01:50 PM   #9
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You should have no problem. The IRS already received these docs in original form directly from the financial institutions.

You should also be able to keep in digital form other financial records not sent to the IRS, such as purchase price for investments and digital copies of checks and credit card transactions.

A problem might arise if deductions are being challenged and you only have digital copies of the transactions and the auditor was intent on disallowing.
Thanks, that is the pretty much how I see it also and "in theory" I would think that the IRS would show up for an audit armed with: W2s, 1099R/DIV/INT and any brokerage/IRA/401K documents.

So, "in theory", I would have digital copies of those same records. None of the paper copies I now have are anything more than a printout from some digital repository at my former employer or financial institutions.

So here goes: "I am destroying the paper ones today."

Will leave me with about a 1/4 of papers such as Trust, Will, POAs, sheepskins, etc.
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