Is there any reason for a FIRE person to keep years of tax records?

[Brook2]

I've read several articles on how long to wait before you shred old tax records, but a lot of it has to do with deductions, debt, home loans, business or employment income.

Since I'm fire, own my home, have no debt, and live on investments and I don't deduct anything - can you think of any reason I should save physical pieces of paper of any kind anymore? Do I need to keep a history of upgrades on my old house in case I sell it one day? I'd rather avoid it if possible.

 

[braumeister]

Anything you think might come in handy some day should be scanned and saved as a PDF on a couple of thumb drives. Then shred it. You can always print the PDFs if you have to.

 

[Gumby]

I've read several articles on how long to wait before you shred old tax records, but a lot of it has to do with deductions, debt, home loans, business or employment income.

Since I'm fire, own my home, have no debt, and live on investments and I don't deduct anything - can you think of any reason I should save physical pieces of paper of any kind anymore? Do I need to keep a history of upgrades on my old house in case I sell it one day? I'd rather avoid it if possible.

You certainly do need to keep enough to establish the basis in your house in the event you need to sell it. The price you paid and any capital improvements first get subtracted from your sales proceeds to determine the capital gain. Then the exemption for sale of your main home is applied https://www.irs.gov/taxtopics/tc701#:~:text=If you have a capital,Home provides rules and worksheets. Then you pay tax on the amount of the gain above that. If you don't have good records about things like the cost of additions, you may end up paying more taxes than necessary.

 

[DrRoy]

I think there is an audit limit for how many years, unless there is fraud. I still have all of mine since post college. They are an interesting time capsule sometimes.

 

[jebmke]

I have scanned all mine. I do have copies of all my F8606 pertaining to my IRA

 

[Drake3287]

If you're only saving copies of tax related forms you can easily keep 40 years worth in one bankers box. How much room does that take up? It's all the other non important papers that you can shred.

 

[rk911]

Anything you think might come in handy some day should be scanned and saved as a PDF on a couple of thumb drives. Then shred it. You can always print the PDFs if you have to.

We keep hard copies of the current year + the previous 5-yrs of tax returns. But those are also scanned into PDF form and kept on a hard drive and CR. We have PDFs of all of our previous tax returns and supporting paper going back to 1970. Why? Just 'cause. File it under the heading of 'ya never know when...'. And it's fun to occasionally look back. YMMV.

 

[MarieIG]

You can scan in excess papers and keep them on a hard drive and disc.

 

[Midpack]

Anything you think might come in handy some day should be scanned and saved as a PDF on a couple of thumb drives. Then shred it. You can always print the PDFs if you have to.

+1. I shredded all my old paper returns/forms years ago. I haven't printed a tax form in years, except those needed to snail mail for state income taxes, though I don't keep a hard copy myself. So I have every tax return I've ever done in pdf form, no one cares but me.

 

[Ian S]

These days it's very easy to keep tax records in pdf form that I see no reason not to. Furthermore, some years back (early 2000's) there was a class action court case in Arizona that eventually succeeded in getting refunds for folks able to produce their state tax returns for, in my case, 1989. No pdf's of my tax returns in those days but for whatever reason - probably because they had been filed away in a closet and forgotten - I was able to find the required tax return copy and submit it for what turned out to be a refund of a couple hundred $$. So you just never know when an old tax return might come in handy!

 

[Badger]

I have been filing Standard Deduction for about 25+ years so it has been fairly simple. However, to be safe I have been saving everything from each year going back to 2012. I threw out older paperwork a few years ago. I could probably throw out a few more years but they aren't in the way yet and I feel it is better safe than sorry. Maybe chuck a few more after this year.
I do save bills for a couple of years and also important documents (marriage license, birth certificates, house purchase, etc.)

 

[pacergal]

I keep 10 years worth of tax documents on paper, shred older ones.

I keep old checks, all home improvement documents, anything related to the house/mortgage, etc.

 

[Montecfo]

You want to keep at least 6 years. And add to that whatever periods for which you need medical records to support HSA medical or records to support basis in IRAs if any.

 

[audreyh1]

I keep 7 years of tax filings including supporting documents, most of that is electronic these days.

There are a few exceptions:
House closing documents from current home.
The 8606 forms from decades ago when I made some post-tax IRA contributions even though TurboTax tracks this every year.
I keep the HSA eligible receipts in case I want to use them, but the plan is to use for Medicare premiums.

 

[scrabbler1]

I keep forms and most supporting documents for all years going back to 1985, the first year I field tax returns. For 1985-2000, this doesn't amount to much paper. From 2001 to 2017 (latest completed year - 5), my tax returns became more complicated for various reasons, so each year's folder includes more paper. For the latest 5 years, I keep full folders including tax booklets. I do have tax returns stored electronically going back to 2014 along with some supporting documents. But, I'm not looking to start scanning all the older stuff because it would be a huge project, not worth my time.

 

[Ronstar]

I keep paper copies for a few years, then shred or burn. I have pdf's for every year back to 1979.

 

[RunningBum]

You want to keep at least 6 years. And add to that whatever periods for which you need medical records to support HSA medical or records to support basis in IRAs if any.

Agree. And I'd keep the full history of any carryover credits, like cap loss or foreign tax credits, until you have used up the credit and are past the audit period.

 

[sdtech]

I keep everything as PDF's but I do have 10 paper file folders labeled 0 to 9. This year I shredded what was in number 4 (2014 records) and am starting to put in my 2024 tax info (property tax, 1099's etc). So I have hardcopies back 9 years and electronic - well for a long time.

 

[FLSUnFIRE]

I have all my 1040's and W-2s but otherwise shred the other back up docs after 7-10 years to keep the folder thin. Mostly just interesting when I stumble across the file. I also expect issues with the USG when I claim my deferred pension due to the incompetence demonstrated by HR when working so having them may help prove I w*rked there and that they paid me.