What to shred and what to keep (old taxes)

[always_learning]

In relation to my post about scanning and shredding ( http://www.early-retirement.org/forums/f27/scanner-recommendation-95899.html ) I was wondering what we should actually keep the originals of regarding taxes and other important papers (financial/medical). I've read the guidelines on how long to keep taxes but am unsure as to exactly what that entails.

Specifically, for taxes 10 years old or older, is it advised to keep all of the various forms, schedules, and worksheets or is just the one/two page 1040 all one needs?

I'm curious as to what others do.

 

[RunningBum]

Once you're past the date where you can be audited, there's no need to keep any of it, unless you need proof for things like equity basis, HSA receipts for future claims, capital loss or foreign tax carryovers, etc. You don't even need the front page of the 1040, unless I'm missing something.

But I'm a bit of a pack rat and get curious about old financial info, so I save a few things. Last time I purged I saw that I still had the old instruction books they used to mail and stuff like that. I know I dumped that. I think I kept the stapled set of pages with the forms. I'd have to pull the box back out and check the folders, but I probably kept the 1099s and W2s and stuff like that, but if I didn't dump all the receipts for charities and 1099-INTs from banks and stuff like that, I probably will on the next purge.

I think there was a thread on this in the last year or two but I couldn't quickly find it.

 

[Alan]

I only keep 10 years worth of paper tax returns. I don’t delete my electronic copies as they don’t take up any physical space.

 

[MrsHaloFIRE]

I scan everything by year. And shred all the paper when in done each year doing the year priors taxes. I keep one paper folder to throw items in as they show up for next years taxes.

 

[ExFlyBoy5]

I don't have any physical copies anymore, as it's all digital now and kept in a couple different places (cloud storage and periodically backed up to external drive that is kept in a fire box). A high speed scanner makes this very easy to do for those documents that I get that aren't electronic (few and far between these days).

When I was settling my Dad's estate, he had kept ALL the taxes (and business records) since 1950 something and it took up a sizable space. He had also kept every single utility bill since he built the house in 1973. Needless to say, there was A LOT to get rid of.

In regards to federal taxes, if all else fails, you could request copies from the IRS. I don't know exactly what you can get or how much it costs, but it's an option.

 

[mickeyd]

I keep tax related paper docs in a box each year and on the outside I write the tax year (i.e. 2018). I then stash it in the attic and remove the box that holds my 7 year old stuff (2011). I shred 2011 and make those shreds part of my next BBQ (makes great kindling.)


I retain all year-end financial docs that I receive from VG forever.

 

[scrabbler1]

I keep 5 years of complete tax folders. Beyond 5 years, I keep only the forms and supporting documents and worksheets which are at most 1/3 the size of the more recent, bulkier folders. I have been building up more completed forms stored electronically, up to about 5 years now.

 

[Gumby]

I have a full hardcopy of every tax return I have ever filed. I keep the backup documentation for the past 5 years.

 

[GrayHare]

For qualified HSA withdrawals one needs to be able to show the amount was not previously deducted as a medical expense. Potentially that's decades of old records.

 

[jim584672]

I have paper copies of every return from since I started working. Everything has been scanned in electronically as well.

I had years of statements, pay stubs, and other docs that I scanned in and dumped. Took many months but worth it. Now I try to avoid any hard copies and everything is electronic.

 

[Ronstar]

I scan all tax returns and backup information. I have almost everything digitally back to 1979. And I keep the most recent 5 years returns and backup info in hard copies.

 

[ncbill]

I only keep 3 years of supporting documentation, actual paper return forever (so far)

 

[Midpack]

I upload every tax doc possible and I don’t request any tax docs in hard copy, but I keep whatever hard copies I get for 7 years. I have scanned copies of all forms and supporting docs going back over 20 years, why delete them?

But there’s less actual paper every year, so I assume hard copies will disappear completely soon?

 

[Souschef]

I am a shredder, unfortunately DW is a pack rat. I was looking through her hope chest for the first time since we moved it here 11 years ago. I found a pamphlet with her son's baby formula.
He is 47 years old !!!!

 

[badatmath]

I believe I read somewhere to keep your w2s until you file for SS.

 

[Texas Proud]

I have a full hardcopy of every tax return I have ever filed. I keep the backup documentation for the past 5 years.

Just like me... except that I have the docs for more than 5 years... maybe 20ish...


I have an expanding folder that I throw them into.. it is pretty slim, about an inch max... no need to go and throw out stuff as that takes time..


BTW, I cannot find some years and think that DW was getting rid of stuff she had no idea what it was and that is part of what was thrown out.. kinda hard to hide missing years!!!

 

[ocean view]

I keep pdf copies of everything (signed forms, receipts, YE stmts, 1099s, TT support schedules) forever, backed up to two places. Hard copies of forms only (no supporting docs) until the statute is closed.

Note that many state statutes are 4 years compared to 3 for Fed. Don’t shred too soon....

 

[Nick12]

Went to Staples and in the copying area they charge for shredding. I will do it myself in my machine. It will pay for itself in no time.

 

[RunningBum]

I believe I read somewhere to keep your w2s until you file for SS.

Never heard that. Pack rat that I am, I don't have all of them. I've looked at what SS shows as my yearly income and verified most years, and it's correct, so why would I still need the W2s? I don't think they would lose the info. If nothing else I have printouts and saved pdfs of them as proof in case my account there gets wiped out.

 

[Midpack]

I believe I read somewhere to keep your w2s until you file for SS.

If you have a recent SS statement, aren’t all the W2’s shown confirmed?

 

[always_learning]

But I'm a bit of a pack rat and get curious about old financial info, so I save a few things. Last time I purged I saw that I still had the old instruction books they used to mail and stuff like that. I know I dumped that. I think I kept the stapled set of pages with the forms. I'd have to pull the box back out and check the folders, but I probably kept the 1099s and W2s and stuff like that, but if I didn't dump all the receipts for charities and 1099-INTs from banks and stuff like that, I probably will on the next purge.

I think there was a thread on this in the last year or two but I couldn't quickly find it.

I, too, thought there was a thread not so long ago but I couldn't find it. It must have been a rabbit trail from something else and just doesn't show up in a search for some reason.

I'm also a bit of a packrat when it comes to 'important papers' and I'm really trying to overcome that!

I believe I read somewhere to keep your w2s until you file for SS.

If you have a recent SS statement, aren’t all the W2’s shown confirmed?

In addition to keeping the w2s until you file for SS, I had also read that the IRS can say they are missing a return going as far back as to the first year you worked (suspected tax fraud has no expiration, so it's different from an audit time limit), which is why we should keep the return "forever". I'm just not clear on what constitutes the return in this instance. Typically, it would be all of the forms and schedules, but I was wondering if just the 1040 would suffice once the audit time has passed. For us, the entire return is pretty thick for many years!

As for the SS statement showing earnings, technically, yes, but what I read said to keep them in case of a data error down the road. Once SS begins, it's not an issue, apparently.

 

[always_learning]

I retain all year-end financial docs that I receive from VG forever.

May I ask why that is? I used to keep them back when they were mailed but quickly found myself buried under paper and have since shredded most. Since cost basis is figured for me, should I be keeping them for any other reason?

For qualified HSA withdrawals one needs to be able to show the amount was not previously deducted as a medical expense. Potentially that's decades of old records.

This is what really started me thinking about all of this as that folder is getting pretty full, too. That, and the ever-growing pile of tax returns. Sigh.

But there’s less actual paper every year, so I assume hard copies will disappear completely soon?

Thus the conundrum, eh? I e-file taxes, save them electronically, and to a portable back up, and yet print hard copies 'just in case' and am now afraid to shred the hard copies.

Never heard that. Pack rat that I am, I don't have all of them. I've looked at what SS shows as my yearly income and verified most years, and it's correct, so why would I still need the W2s? I don't think they would lose the info. If nothing else I have printouts and saved pdfs of them as proof in case my account there gets wiped out.

You're probably fine if you have the scanned copies.

I'm beginning to think all of this stuff would be fine scanned and saved. I guess I fear data corrosion of some sort, but what are the chances I'd actually need to produce X paper on demand? Hmm....

 

[RunningBum]

You're probably fine if you have the scanned copies.

Scanned copies? From the 70s and 80s? No, I don't have anything like that. Nothing I've seen in this thread is going to make me lose sleep over that.

 

[ocean view]

In addition to keeping the w2s until you file for SS, I had also read that the IRS can say they are missing a return going as far back as to the first year you worked (suspected tax fraud has no expiration, so it's different from an audit time limit), which is why we should keep the return "forever". I'm just not clear on what constitutes the return in this instance. Typically, it would be all of the forms and schedules, but I was wondering if just the 1040 would suffice once the audit time has passed. For us, the entire return is pretty thick for many years!

I’d like to clarify your reference to the IRS’s ability to go back beyond a normal statute of limitations period. You are correct if they believe you failed to file a return. The statute of limitations clock starts to tick only when a return is filed. The clock never starts on a return that was never filed, so yes, they can assess tax and penalties years later. In my career in corporate tax I experienced state tax agencies coming after us for 10+ years of back taxes a few times as they believed the corporation had created nexus in their state. That’s why we always filed zero returns in jurisdictions where we may not have been required to file, in order to start the statute running and limit the time available for late assessment.

IMO, one does not need to keep an original, hard copy return for this purpose. A soft copy is fine. I also think the odds of the IRS contacting you for failure to file years later is fairly slim. If you received any w2 or 1099 income, they will be cross checking in somewhat real time for a return. If they can’t find it, you’ll get a letter within a year (again, based on my experience).

 

[Midpack]

In addition to keeping the w2s until you file for SS, I had also read that the IRS can say they are missing a return going as far back as to the first year you worked (suspected tax fraud has no expiration, so it's different from an audit time limit), which is why we should keep the return "forever". I'm just not clear on what constitutes the return in this instance. Typically, it would be all of the forms and schedules, but I was wondering if just the 1040 would suffice once the audit time has passed. For us, the entire return is pretty thick for many years!

As for the SS statement showing earnings, technically, yes, but what I read said to keep them in case of a data error down the road. Once SS begins, it's not an issue, apparently.

Do you have a source to support your statements?

From what I’ve found on ssa.gov you have 3 year 3 months 15 days to correct any past income errors, but the earnings shown on your statement are considered verified. I print a new SS statement every so often, and keep the last one, but no other records for SS.

As for tax records, the irs.gov says you need to keep records for three years. But there are some circumstances that require six or seven years records. Easy to confirm online. So if you keep seven years you’re covered for anything except a fraudulent or missing return.