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Records Retention

How long should I keep my tax related documents?

That is a common question many taxpayers ask.

You should keep tax records for as long as the IRS has the ability to audit your return and/or impose additional taxes, which generally is three years after you file your return. This means you likely can shred most records related to tax returns for 2010 and earlier years.

But you’ll need to hang on to certain records beyond this timeline:

  • Keep tax returns themselves forever, so you can prove to the IRS that you actually filed. (There’s no statute of limitations for an audit if you didn’t file a return )
  • For W-2 forms, consider holding them until you begin receiving Social Security benefits. Why? In case a question arises regarding your work record or earnings for a particular year.
  • For records related to real estate or investments, keep documents as long as you own the asset, plus three years after you sell it and report the sale on your tax return.

These are only general guidelines, so please contact us if you would like further guidance based on your facts and circumstances.

As a related side note – much of the information used in preparing your tax returns is gathered from documents received during January: W-2’s, IRA & Pension distribution forms as well as other documents which detail Social Security benefits, mortgage interest, church contributions, etc.  One additional form that is important is the Form 5498-SA.  This form reports the FMV as of December 31st and contributions you made to your Health Savings Account.  Form 5498-SA is required to be sent to you by May 31st by the Trustee.

Be on the alert and start saving your 2014 tax documents in a large envelope NOW!  Happy records retention!

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