STEPHEN SMALENBERGER, EA
How Long Should I Keep My Tax Returns & Documents?
The question I hear a lot, especially this time of year, is how long should I hang on to my tax returns, tax documents like W-2s and 1099s?
Essentially, as long as the Statute of Limitations is in effect. Statute of Limitations is a legal term which basically says you have this window, this timeframe, after which you can no longer file for a refund and the IRS can no longer initiate an audit. For the general public, this is essentially three years, there are some exceptions to that, but essentially three years.
However, there are reasons why you’d want to hold onto them longer than that. If you’re applying for student loans, applying for a mortgage, looking back at your social security benefits, or if you’ve contributed to non-detectable IRAs, you want to be able to look back and track that longer than just three years.
Our recommendation is actuary to hold it longer, hold it indefinitely.
Some ways to do that is to scan them in. If you can buy a cheap printer and scanner, scan them to pdfs. Save them either on a flash drive, put them in a lockbox, or even upload them to an online vault, like Google Drive or Dropbox. Those are some really good options.
Sometimes people wonder if you need to have the originals. The answer is no. As long as you can pull up a document, a copy, something that was even scanned in, that works. The IRS doesn’t need originals.
And when you’re done with everything, be sure to shred it. Don’t throw it in the trach can, don’t recycle it, be sure to destroy it securely.
In summary, our recommendation is to keep them indefinitely. It’s not as hard as it was in the past, you can put these on a pdf, on a small flash drive, it’s very cheap. But most importantly, you know where your documents are, and can produce them when needed.
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I want to share two recent stories that have shaped some new thinking and understanding for how I think people view financial planning.
Steve enjoys getting to know clients and hear their unique stories and the lessons learned which has brought them where they are today. One of the reasons he enjoys what he does is the ability to show the outcome that can be achieved with different choices. He also enjoys continually learning.