What Tax Documents to Save or Shred is not a Crap-Shoot
January: a new year; a new start. You want to declutter your office, especially your papers and files. Financial papers and tax records present a particular challenge. I have had some clients confess to saving every bill and receipt from the last twenty years.
A recent article by Ken Belson for the New York Times explains what papers you need to keep for the IRS and what you can let go of.
- You need to keep all of your files forever only if you have committed fraud – there is no statute of limitations.
- If the IRS thinks you have under reported your income by 25% or more they can audit you going back six years.
- Otherwise you only need to keep detailed records for three years.
- Beyond that simply keep your tax returns and proof of payment of your taxes.
You can read the official IRS guide – Publication 552, which is written in regular English instead of accountant-ese.
Now excuse me while I shred all my receipts from before 2007. ;-)
If you would like to learn more about home office paper organization – check out my book The Smarter Home Office available on Amazon.
Photo by Alan Cleaver
discharge papers . .Receipts for items you may return or may need for warranty purposes until they expire .This list is in no way comprehensive.
Edward-
You are right, in no way is this list complete. I simply wanted readers to know they do not have to keep every piece of paper and receipt forever.
Thanks for mentioning discharge papers in your comment.
Thanks for the thumbs up. It is nice to know that real people (not just anonymous numbers) are reading and enjoying my blog. If there is a topic you would like me to address, please let me know.