Comments on: How to store your tax returns

By: Ernie Svenson

Ernie Svenson — Thu, 24 Jul 2008 13:31:56 +0000

Paper records are NOT required by the IRS!!! Here is a link to some articles that discuss the permissibility of scanning and keeping electronic records: http://tinyurl.com/67totb

Read IRS Rev Proc. 97-22, which explains what is required from an electronic storage system:http://tinyurl.com/5p3cys

Again, so that people won’t be confused by the surfeit of misinformation posted in teh article and in the ensuing comments, SCANNING IS PERMISSIBLE.

By: Andrew

Andrew — Mon, 05 May 2008 13:43:06 +0000

What happens if they try to audit you and you simply don’t have the information?

By: Alfonzo

Alfonzo — Fri, 11 Apr 2008 23:42:24 +0000

You dont need to keep ‘decades’ of your tax return. Just what the government wants. Any more than your 7 or 8 years means you are verging on hoarding. Like people who hold onto newspapers from the year 1992.

By: CanadianKate

CanadianKate — Fri, 11 Apr 2008 06:01:04 +0000

I’ve surfed into here from Simple Dollar and am fascinated with all the issues raised here. Here’s the one idea I haven’t seen raised.

Our non-important records are in boxes labeled Shred When Dead. The kids know there is no need to even open the box. And if we have to move before we die, we know we don’t have to deal with those boxes either.

We have almost unlimited storage (and run our own businesses) so save everything, but after clearing out my in-laws (who ran their own business) and my parents’ (who tossed nothing) estates, I realized that making things easier for one’s executor is important.

In times of emotion, adding a dozen file boxes for the children to look over and make decisions about is unfair. If they hire someone to act as executor, it will be expensive.

The last 10 years of tax records (and all stock records except for stocks that have been sold) are in the filing cabinet. But anything that I’m keeping only for ‘interest’ or ‘just in case’ is in well labeled file boxes.

As for storing the records that you are saving only for the government when you don’t have lots of storage room…

Remember these aren’t current files so they can be well under your bed (my bed has drawers underneath but there is a space in the centre of the bed that the drawers runners don’t use) or turned into end tables (build/find large wooden boxes and put the records inside and pop a lamp on top.)

By: Dave

Dave — Thu, 10 Apr 2008 17:39:34 +0000

You only need to keep your tax returns for 7 years and that is because that is how far back the IRS is willing to go to audit you not because it is a law. I like to live life on the edge so I only keep mine for 3 years. Sure saves a lot of space and time.

By: Todd

Todd — Thu, 10 Apr 2008 16:50:55 +0000

Since 2000 (1999 I did a poor job of it) I’ve been saving the 1040 forms in pdf. So far I’ve been holding on to all the tax related forms since then only because it doesn’t take up much space.

What I plan on eventually doing is scanning the related documents like w-2′s and such, backing them up everywhere and shredding the documents. So if I did need it I can just print out what I have scanned.

By: Rhetor

Rhetor — Wed, 09 Apr 2008 16:03:46 +0000

Throughout the year, I toss in/sort receipts, info, etc that will be needed for filling out the tax form into an expanding file folder. Once I’ve gotten all the paperwork done, the file folder is labeled, bundled up, and tossed into the back of the closet. All paperwork in one place, easily labeled, and it takes up minimal space.

By: Jared

Jared — Wed, 09 Apr 2008 14:59:52 +0000

I am a tax auditor for state taxes and you would be surprised at the number of returns that end up as audits for non-filing. Most of the time this happens because of an e-file error or simply because the taxpayer forgot to submit the state return. This happens both with returns filed by accountants and individuals. According to the IRS there is no statute of limitations for a non-filer. see http://www.irs.gov/publication.....tml#d0e617 So if the IRS has the right and authority by law to audit you on the year you turned 16 because you didn’t file a return even if you are 85. My vote is to keep forever. It really doesn’t take up much room. I have two desk drawers that have tax info and I’ve only been filing under 15 years.

By: Melissa A.

Melissa A. — Wed, 09 Apr 2008 14:58:39 +0000

@adora: I always think of it as 6 years + the current year. That’s how records managers deal with financial records, at least in government (I’ve worked at two levels and we always keep financial for 7). Makes sense to me, but 6 or 7 is probably a good minimum.

By: A.M.B.A.

A.M.B.A. — Wed, 09 Apr 2008 11:29:18 +0000

I’ve filed a tax return for over 30 years now. I have a paper copy and supporting documents for each year. How much room does it take up? Three or four file folders at most. I obviously agree to hold them forever.

A.M.B.A.

By: Jay

Jay — Wed, 09 Apr 2008 02:34:49 +0000

Whatever records you are keeping, I would worry more about keeping records that the IRS does not already have — records showing purchases and sales of individual stocks, receipts or proofs of payments supporting Schedule C deductions, etc. The IRS already has your tax returns, W-2s, and 1099 forms.

By: Kyle

Kyle — Tue, 08 Apr 2008 23:03:24 +0000

I really doubt everyone needs to do this. My taxes have always been very simple – no itemized deductions, no estate stuff, very little in the way of investments (one simple IRA which is now closed). I see no reason for me, in my current situation, to keep paper copies of anything – I even scan and shred my W2s. Seeing as some companies can provide a digital copy of your W2, one must be able to provide that if audited. What happens to people who have a house fire, flood, or other catastrophe and lose all their records? Will they be thrown in jail for not having the original paper copies of everything? The whole thing strikes me as a bit fear-mongering. Decide for yourself, based on your unique situation, how far back (if at all) to keep paper records – taxes and others.

By: Erin Doland

Erin Doland — Tue, 08 Apr 2008 22:24:52 +0000

@Anna — I think that you’re referring to the eFile 1040, but that’s not the document we’re referring to (at least it’s not the one I’ve been referring to). I’ve been talking about the regular 1040 and the accompanying documents for dividends, investments, etc. If you eFile, then you won’t have anything but a PDF and a print copy if you chose to print it.

By: Anna

Anna — Tue, 08 Apr 2008 21:45:39 +0000

I’m still confused about this pdf issue. I used H&R Block’s free online tax prep for the last two years. In the final step, it creates a pdf which you print and then send to the IRS. I don’t see how it would be any different to print that pdf 5 years from now if I needed another copy, since it’s the same format I’ve already successfully submitted.

By: indigo

indigo — Tue, 08 Apr 2008 21:15:18 +0000

I went & found the IRS page about it. Of course it’s complicated & not terribly clear: http://www.irs.gov/businesses/.....13,00.html