How long should I save my tax documents?

The general rule of thumb is to keep your tax documents for at least three years. However, there are some exceptions to this rule, and the amount of time you need to keep your documents may vary depending on your individual circumstances.

Here's a breakdown of how long you should keep different types of tax documents:

3 years:

• Tax returns: This includes your federal and state tax returns, as well as any supporting documentation, such as W-2s, 1099s, and receipts.
• Proof of deductions and credits: This includes documentation for any deductions or credits you claimed, such as mortgage interest statements, charitable contribution receipts, and medical bills.
• Business records: If you are self-employed, you must keep all of your business records for at least three years. This includes income statements, expense reports, and bank statements.

4 years:

• Employment tax records: This includes records related to your employees' wages, taxes, and benefits.

7 years:

• Records for bad debt deductions: If you claim a bad debt deduction, you must keep the records for seven years.
• Records for worthless securities: If you claim a deduction for worthless securities, you must keep the records for seven years.

Indefinitely:

• Records related to the purchase or sale of assets: This includes documentation for the purchase or sale of your home, stocks, bonds, and other assets.
• Proof of income: This includes records of your income, such as pay stubs, bank statements, and investment statements.

It is important to note that these are just general guidelines, and the best way to determine how long you should keep your tax documents is to speak with a tax professional.

Here are some additional resources that you may find helpful:

• Internal Revenue Service (IRS): https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping
• National Association of Enrolled Agents (NAEA): https://www.naea.org/
• American Institute of Certified Public Accountants (AICPA): https://aicpa-cima.org/

Here are some additional tips for keeping your tax documents safe:

• Scan your documents and store them electronically. This will make it easier to back them up and protect them from damage.
• Keep paper copies of your documents in a secure location. This could be a fireproof safe or a locked filing cabinet.
• Shred any documents that you no longer need. This will help to protect your identity from theft.

By following these tips, you can ensure that you are keeping your tax documents safe and secure.