Should You Shred or Store Your Tax Records?

by | Feb 13, 2018 | Accounting

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Each year, you ensure you meet all the requirements for your US federal tax filing in Edison. However, do you know what to do with the documents after tax time passes? Some people hang on to them, while others have them shredded. The question is, what is the best option for you?

Here you can learn some general guidelines to use when it comes to old tax documents.

Follow the Rule of Three

In most cases, you should plan on storing your 1099s, W-2s, receipts, tax returns and anything else related to your taxes for a period of at least three years after the date they were filed. This is information that has been provided by the IRS. For example, if you filed your 2016 taxes on April 18th of 2017, then you should hang on to the paperwork until the same date in 2020.

Exceptions to this Rule

In some situations, the documents related to your US federal tax filing in Edison will need to be kept for longer than three years. If you ever file a claim for a loss because of bad debt deductions or worthless securities, you should hang on to the papers for a period of seven years. Also, if you don’t report income that should be reported, and it is over 25 percent of the total income on your return, then you should keep the records for six years.

You can work with professionals to better understand how long you should keep documents related to your US federal tax filing in Edison. Being informed is the best way to protect yourself.

Learn more about keeping your tax documents by visiting the WorkMyTaxes website.

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