How long do I keep Tax Records? A Guide

 


I'm sure you have asked this question at least one time right after you have filed your tax return every year.

As a Professional Tax Preparer/Accountant, I get asked this question a lot. 

So, here is the basic rule of thumb for holding onto those very important documents:

• MINIMUM 3 YEARS After Date Filed for All Tax Returns and Records used to prepare the tax return.

• ADDITIONAL 3 YEARS For Sale/Disposal of REAL ESTATE PURCHASED (including your home). Keep the records that show the original cost of the property (purchase price) plus improvements done over the years.

• ADDITIONAL 3 YEARS For Sale/Trades of INVESTMENT SECURITIES (stocks, bonds, crypto, mutual funds, etc.). Keep the records showing the purchase amounts to include stock splits, dividend reinvestments, and nontaxable distributions. Also keep track of when any bonds or Treasury bills/notes mature.

• ADDITIONAL 3 YEARS After Depleting Accounts that show payments made to NONDEDUCTIBLE IRAS or POST TAX 401(k)s to prove the NON TAXABILITY OF THESE withdraws and be sure to fill out FORM 8606 with your tax return in the year of the contribution as well.

• MINIMUM 4 YEARS for all PAYROLL RECORDS to include both state and federal tax reports as well as records showing wage amounts paid, payment dates, and employee's data such as names, social security numbers, and employment dates.

• FOR SEVERAL DECADES keep RECORDS supporting the COST of ASSETS and DEPRECIATION claimed because, in some cases, the depreciation on some assets can last for up to 40 years.

Scan or Save copies of these documents in your computer and on flash drives so you don't have to come up with STORAGE for the paper.

ALSO, when disposing of any PAPERWORK that contains personal information such as NAMES, DATES OF BIRTH, AND SOCIAL SECURITY NUMBERS, be sure to SHRED THESE DOCUMENTS and don't just toss them into the garbage!

Visit our website and stay informed on the latest IRS information that will help you save money and make empowered choices.  Sign up to receive timely information by joining our community, www.Dorseytaxplace.com

Don't hesitate to reach out with any questions.

Thank you for reading!
Bonnie Dorsey

972-672-8850

P.S. did you know we have a secure portal where you can upload all of your important documents doing away with files and papertrails?  www.Dorseytaxplace.com /
Contact us for more information:
 972-672-8850
Dorseytaxplace@gmail.com

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