March 18, 2013
Which Tax Records Should You Save?
Tax season is a good time to consider which financial records you should save indefinitely, and which can be safely shredded.
It's tax season, so this is a good time to consider which financial records you should save and which can be safely shredded.
The IRS normally has up to three years to request documentation. But if you underreported more than 25 percent of your income, it jumps to six years. If you didn't file a return – or lied – there's no statute of limitations.
To be safe, hold onto certain paperwork for seven years, including W-2 and 1099 income forms, year-end bank and brokerage statements and receipts for deducted expenses. You can usually shred ATM, debit and credit card receipts after reconciling with monthly statements. Likewise for pay stubs after you receive a year-end pay statement and W-2 form.
Bottom line: Keep your tax returns and supporting documents for 7 years.
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