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Old 01-11-2021, 07:46 PM   #61
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I was on a shredding binge today where I found that apparently I never do any . . . Had the purchase papers from a car I bought in 1995. . . .

Taxes are next. . . Do I really only need 7 years? Do I ditch the 1099s then too? I probably have at least 20 years. . . Somehow they are hardest of the papers to get rid of.
if you're going to keep hard copies then i would keep whatever was needed and used used to prepare the return. W2's, 1099's, etc. we used to do that but no more.

i have scanned all of our tax returns going back to the 70's right up thru 2019 and i'll be scanning in all of the 2020 forms as they come in. those digital scans are archived several ways. i also keep hard copies for the most recent 6-years (old habit). i scan our quarterly reports, bank statements and other documents as well. that really reduced the paped load here. i used to keep canceled checks for 5 or 6 years back in the day but i can't recall ever needing to find an old check for anything other than nostalgia purposes. when we cleaned out my father-in-law's home we found receipts for 60-yr old utility bills!
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Old 01-11-2021, 10:19 PM   #62
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After my mother passed I was going through her files and found tax returns dating back to the 1950s. Fascinating....
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Old 01-11-2021, 11:43 PM   #63
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I thought the IRS can only audit you within 3 years?
all bets are off on that if fraud is suspected
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Old 01-11-2021, 11:55 PM   #64
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The older ones I had copied . . . on floppy disks and CDs. Oops.
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Old 01-12-2021, 04:01 AM   #65
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all bets are off on that if fraud is suspected

Then itís 6 years.

But only forever if you donít file at all or completely omit forms.

https://www.forbes.com/sites/robertw...h=50c2edc37ba6
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Old 01-12-2021, 06:10 AM   #66
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l have our tax returns and supporting paperwork back to at least 2012. I may have them farther back than that but not sure where they are. Those 8 that I can access quickly have all been done through AARP at the local library. I know they keep the previous year records but not sure how far back they might save. However, for at least a couple of decades we have filed standard deduction so I don't know how important it is to save them. The IRS has all the information I have but I will save them anyway.


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Old 01-12-2021, 08:32 AM   #67
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We just took money from ROTH accounts for the first time. Both DW and I are well over 59.5. Turbo Tax asked for the amount of total contributions (not including conversions) to ROTH accounts. I haven't kept those records per se, but since Turbo Tax has asked for contribution amounts in the past, last year's pdf of our tax return had an accumulated amount! Yikes. That saved me a major headache.
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Old 01-12-2021, 10:29 AM   #68
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We just took money from ROTH accounts for the first time. Both DW and I are well over 59.5. Turbo Tax asked for the amount of total contributions (not including conversions) to ROTH accounts. I haven't kept those records per se, but since Turbo Tax has asked for contribution amounts in the past, last year's pdf of our tax return had an accumulated amount! Yikes. That saved me a major headache.

Was the Roth less than 5 years old?
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Old 01-12-2021, 11:07 AM   #69
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We just took money from ROTH accounts for the first time. Both DW and I are well over 59.5. Turbo Tax asked for the amount of total contributions (not including conversions) to ROTH accounts. I haven't kept those records per se, but since Turbo Tax has asked for contribution amounts in the past, last year's pdf of our tax return had an accumulated amount! Yikes. That saved me a major headache.
I've noticed that TTax asks that question and offers to track your Roth basis, but if you've had a Roth account for more than 5 years, the answer doesn't matter anyway. They should really change that screen so that it asks you when you established your first Roth and then only asks about contributions if you say it's less than 5 years old.
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Old 01-12-2021, 11:19 AM   #70
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I've noticed that TTax asks that question and offers to track your Roth basis, but if you've had a Roth account for more than 5 years, the answer doesn't matter anyway. They should really change that screen so that it asks you when you established your first Roth and then only asks about contributions if you say it's less than 5 years old.
Whew...... Thanks for answering that , as I suddenly thought with horror how would I track the contributions made for all the years for both of us...
I never thought about it, since I believed it's non-taxable when withdrawn since taxes were already paid on contributions.
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Old 01-12-2021, 12:14 PM   #71
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I used to keep mine up to five years but then found out that was too much. Itís three years back per the IRS. After three years you cannot be audited and you will hever be questioned beyond three years prior. So pitch it!
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Old 01-12-2021, 12:21 PM   #72
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I bought myself a Fujitsu IX500 scanner and just scan everything. If/when it passes legal limit or runs out of physical space, shred the paper version. Saves me time thinking about.
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Old 01-12-2021, 12:32 PM   #73
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So the IRS says 3 years but I keep a rolling file with 4 years...I never understood when year 3 ended and year 4 began.

I also keep closing statements for homes until 4 years after sold (same file).

The actual returns are all saved digitally (& on TT).....the receipts, w2s, 1098s, etc, is what's in the paper file....and it has become a slim file over the years....But I also don't bother to print investment firm tax documents if they have their 7 years archived online. I figure I can fetch them if the IRS comes calling.
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Old 01-12-2021, 12:42 PM   #74
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iRS: "we believe you massively understated your income 5 years ago."

Taxpayer: " you can't prove that, cuz I shredded all the evidence."

IRS: " Not my problem. Here is your assessment of tax penalty and interest."

Granted, these are remote risks but keeping 7 years of tax returns and support should be a minimum for most taxpayers.
Once you're past 3 years that's not how it works:

https://www.americanbar.org/groups/b...17/08/06_wood/
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Old 01-12-2021, 12:52 PM   #75
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So the IRS says 3 years but I keep a rolling file with 4 years...I never understood when year 3 ended and year 4 began.

I also keep closing statements for homes until 4 years after sold (same file).

The actual returns are all saved digitally (& on TT).....the receipts, w2s, 1098s, etc, is what's in the paper file....and it has become a slim file over the years....But I also don't bother to print investment firm tax documents if they have their 7 years archived online. I figure I can fetch them if the IRS comes calling.
It's 3 years after the return is due (including extensions) or when you file, whichever is later. If you file your 2020 tax return on or before April 15, 2021, then you should keep the records until April 15, 2024.
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Old 01-12-2021, 01:00 PM   #76
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I used to keep mine up to five years but then found out that was too much. Itís three years back per the IRS. After three years you cannot be audited and you will hever be questioned beyond three years prior. So pitch it!
It's 6 years if the IRS believes you significantly understated your income or overstated your basis in the sale of a capital asset. If your income is well documented on W-2s or 1099s and you don't own any foreign property or bank accounts, then 3 years is fine.

If you sell a high-value house and are adding a lot of improvement costs made over several years to the basis, then it's probably a good idea to hang onto that documentation for 6 years.
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Old 01-12-2021, 01:22 PM   #77
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We have have retained all tax records dating back to 1995 when we bought our first scanner and started to e-file. We switched over to paperless record keeping completely in 1999 and haven't looked back. We have retained all bank, credit card, and major purchase and expense invoices since 1995 in PDF format. We back all the data onto our home storage servers and also offline onto SDXC cards and USB thumb drives. It really reduces clutter in the house. One day we will figure out what to do with our massive collection of books (probably donate them) and other stuff we don't really need. We don't want to end up in the same situation as our parents who are facing that dilemma of "too much stuff" in their 80's.
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Old 01-12-2021, 01:45 PM   #78
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It's 6 years if the IRS believes you significantly understated your income or overstated your basis in the sale of a capital asset. If your income is well documented on W-2s or 1099s and you don't own any foreign property or bank accounts, then 3 years is fine.

If you sell a high-value house and are adding a lot of improvement costs made over several years to the basis, then it's probably a good idea to hang onto that documentation for 6 years.
We ended up with taxable capital gains on our house sale in 2018, so we'll be keeping the supporting documentation and improvement receipts associated with that house for a while.

As it is, the purchase of the house we sold in 2018 occurred prior to 1997, and we had deferred capital gains from the prior house sale to that (this was two years before the $250k/$500k homeowner's exemption was implemented). So, we have the documentation and improvement receipts for the sale of the previous house sold. Along with a faded Xerox copy of Form 2119.
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Old 01-12-2021, 02:52 PM   #79
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I guess I am just confused about how the process works. When I review my portfolio, it usually shows me from inception including additions and reinvested income. I was hoping this would be sufficient for the IRS. What am I missing?
If it's a taxable account and you have purchased an asset inside it, in order to prepare your tax return properly when you sell that asset, you'll need to know the date it was purchased and the amount it was purchased for. In some cases you need to know more bits of information.

Your brokerage firm may or may not have that information. Depending on when you bought it and what kind of asset it was, they may be required to track it. Broadly speaking if you've bought the asset in the last few years then they are required to track it for you.

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Whew...... Thanks for answering that , as I suddenly thought with horror how would I track the contributions made for all the years for both of us...
I never thought about it, since I believed it's non-taxable when withdrawn since taxes were already paid on contributions.
As long as you're over 59.5 and have had a Roth for more than 5 years (which it sounds like you have), then you're right -- no taxes and no penalties on any withdrawals.
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Old 01-12-2021, 03:31 PM   #80
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I have all my returns and supporting documents going back to 1981. I still have rental real estate purchased in 1988, so I will definitely keep returns going back that far for the purposes of researching depreciation and other items taken for various expenses over the years.
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