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Are you saving old tax returns and paperwork?

Give up the notion that you need to keep your returns forever!

The minimum recommended period to retain a tax return is three years after you file your return. This is because the IRS has three years to audit you and assess additional taxes (or offer a refund), or they have six years if you have underreported your income by 25% or more.

Our advice: As your tax return is one of the most important documents related to your financial history, conservatively we recommend keeping your returns (federal, state and local) and supporting documentation for seven years after the date of filing.

Example: You file your 2020 tax return sometime between February 1 and October 15, 2021. Keep copies of the return and documentation for seven years after filing, or until October 15, 2028. Mark the envelope or small box to discard or shred on October 15, 2028. Generally, you’ll have your return and significant documentation (W-2’s, year-end statements, property tax receipts, 1099’s, etc.) with your return. Keep them all together and file by the year.

If you keep your tax returns and documentation electronically, put it all in an online folder and label the folder something like: “2020-Tax-Return-Discard-Oct-2028”. You might think that if it is electronic you should or can keep it forever, but if not now, electronic storage will eventually be full and cost you money. Also, you want to discard in a timely manner so that it is secure and relatives or friends won’t see or discover your old files.

If you used a professional preparer, check with them on their record retention schedule. You’ll find that most CPA firms and major tax preparation companies will keep an electronic copy of your return as long as you are a client of their firm or company, or at least seven years.

However, even a tax return you filed years ago can be retrieved from the IRS or state government. Use this link to retrieve a copy of your return.

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