Old tax returns ?

[papadad111]

Doing a post FIRE cleanup and getting rid of tons of old paperwork. Old pay stubs old bills and such. Why we save that stuff I'll never know. As for tax returns what is conventional wisdom - do we keep prior 10 years and destroy the rest ?

Seems like SSN's were on everything back then.

 

[aaronc879]

According to the IRS, 3 years is enough most of the time. Maybe 7 years in some cases.

Period of Limitations that apply to income tax returns

Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
Keep records indefinitely if you do not file a return.
Keep records indefinitely if you file a fraudulent return.
Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

I keep everything for 7 years but I guess I don't need to. Maybe i'll re-think that.

 

[Onward]

I keep everything forever. It's just my nature.

Isn't it possible you would need a tax return from 20+ yrs ago to validate your Social Security earnings record?

 

[Texas Proud]

I have 40 years of tax returns around here someplace.... the old one are not where the new ones are, but in a pinch I could find them all...


BUT, I am cleaning up and getting rid of old bills and other junk that I just do not need... also plan to get all tax returns together soon and just get rid of the supporting docs on the old ones.....

 

[Ian S]

IIRC, there was a case here in Arizona decided back around 2001 that resulted in tax refunds for improper treatment of dividends in the late 1980's. Because I had my tax old returns for those years, I was able to easily claim the resulting refund which was in the 100s of dollars. After that I tend to keep my old returns although now they are in electronic format such as pdf.

 

[truenorth418]

I recommend keeping the bare minimum required by law. My father recent died, leaving decades of tax forms, financial files, records of old property sales, etc. It was unnecessary and made it more confusing and time consuming for the executor to settle his estate.


Sent from my iPhone using Early Retirement Forum

 

[timo2]

I'm planning on scanning most the old returns before I shred them.

 

[scrabbler1]

Until a few years ago, I kept the entire folder for each tax year which included the tax booklets and all the accompanying stuff I got with the 1099s. Then I whittled that 25-year mass of paper down by 2/3, leaving me with only the tax returns, a few key pages from tax booklets, and any worksheets I created to help complete my income tax forms. I also combined several older years which had little extra paper, freeing up many folders.

 

[soupcxan]

Scan to PDF, backup the hard drive, shred the hardcopies.

 

[RetireBy90]

...
Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
Keep records indefinitely if you do not file a return.
Keep records indefinitely if you file a fraudulent return.

Just a couple items caught my devious attention:

- So if I keep my records longer than recommended, is that evidence I have filed a fraudulent return ?

- If you didn't file a return, what records are you keeping ? not tax records.

 

[unno2002]

Before tossing old tax returns, check you social security statement to ensure that the SS account correctly reflects your earnings and "contributions" for the year.

 

[HpRyder]

Using ScanSnap to scan fed & state returns & supportive documentation. Then take it to CPA to shred it all. I only keep original wet signature documents & Lasser's Tax Guide. Digitally it all fits easily on an external hard drive in an encrypted format.

 

[rodi]

I have all my tax records ever filed. I'm paranoid. But as pointed out - I was able to use my tax records and w-2's to prove misreporting (under reporting) of SS income/taxes paid.

I don't keep the paper books anymore... I used to. Now it's just the submitted tax forms and the corresponding docs (w-2s, 1099s etc.)

 

[frayne]

Ten years is all I keep. Just FYI, the IRS does not have to abide by any statute of limitations so they can go back to the year Christ was born.

 

[pb4uski]

I purged my paper records when we moved and keep the last four years (currently 2011 to 2014, inclusive).

 

[braumeister]

Scan to PDF, backup the hard drive, shred the hardcopies.

This is what I have done for many years.

 

[heeyy_joe]

Keep the minimum, but make sure you know the basis of your retirement accounts before shredding.

 

[Texas Proud]

Ten years is all I keep. Just FYI, the IRS does not have to abide by any statute of limitations so they can go back to the year Christ was born.

Incorrect.... that is only if they can prove fraud.... no fraud, then they have a time limit...

 

[Winemaker]

I kept all DW paystubs from her 1st and 2nd teaching jobs, as well as all the stubs as from the years of subbing, while staying home with DD and DS. She went back full time after the youngest started school and taught for another 28 years. Amazingly enough, NONE of her earlier time, was never recorded, or even employment status. We moved to another state after 2nd crumbsnatcher was born. If I hadn't kept those eight years of stubs, we would never would have the proof to purchase her past time for the 2nd state's pension plan.

 

[Cobra9777]

After ER, I went through a major office purge and reorganization. Shredded mounds and mounds of paper... bank statements, old bills, canceled checks, expired insurance policies. I now produce and retain almost no paper copies of anything. One thing I did retain is 10 years of tax returns and supporting documents, but only after going through the folders and disposing of stupid stuff like 1099 "instructions" from Fidelity. Older returns were scanned and all paper shredded.

 

[Al in Ohio]

I am a big fan of not wasting space and not holding on to stuff rarely used. Files included. I' d say I keep returns for about 7-8 years give or take a year. I think I save electronic pdf of the return going back 10-15.


Sent from my iPhone using Early Retirement Forum

 

[rodi]

I kept all DW paystubs from her 1st and 2nd teaching jobs, as well as all the stubs as from the years of subbing, while staying home with DD and DS. She went back full time after the youngest started school and taught for another 28 years. Amazingly enough, NONE of her earlier time, was never recorded, or even employment status. We moved to another state after 2nd crumbsnatcher was born. If I hadn't kept those eight years of stubs, we would never would have the proof to purchase her past time for the 2nd state's pension plan.

I've had a few similar incidents where my paranoia paid off... megacorp misreported SS earnings when they changed corporate names after a split... Tax returns AND paystubs helped resolve it. On another occasion they cancelled my health insurance while I was on maternity leave, despite having pay continuation for part of the maternity leave with payroll insurance deductions. (This was especially bad since I had the family insurance through my employer - and I went in for a new-baby checkup to be told insurance was cancelled.). Another time they canceled my insurance when I relocated - again - I was able to prove to HR and get it resolved because I had paystubs that showed insurance deductions.. And finally, they decided I was to accrue vacation of negative x hours per payperiod... and pay stubs showed their error (which they denied till I showed them the payroll stubs.) I didn't notice for several months - and they'd wiped out over 100 hours of vacation... I ended up correcting it to within 10 hours before I gave up the fight.

Paranoia about getting rid of records has paid off, financially for me.

 

[Car-Guy]

These days I keep the past 5 years worth of records. In the past, before I retired, I probably had 15+ years of records but I found I never needed anything older than the past 2 years.

 

[papadad111]

Thanks. OP here. I burned everything prior to 2004 in our fire pit last weekend.

Didn't bother scanning into PDF either. Life is cluttered enough. Really, no need. For the post 2004 records, I am keeping a hard copy but will destroy one as a new year gets filed.

Some mention needing to keep for record keeping / cost basis for retirement funds. I can't see much hassle - IRS is gonna tax u for the amount withdrawn. Cost basis doesn't matter unless you made a few after tax contributions. Tiny in the scheme of things. Most brokers carry cost basis now by law for taxable accounts. No tax on Roth withdraws. Am sure there are good outlier reasons to keep that much paper but I couldn't justify it. It was a good feeling to purge and de-clutter. We downsized houses recently and still pitching stuff we packed but have decided we won't ever really use. Goodwill loves us !

 

[LARS]

Beyond seven years I only keep the 1040: throw out all supporting documents. Prior to 7, keep everything.


Sent from my iPad using Early Retirement Forum