At the end of tax season, you might be wondering what you should do with all your paperwork. If you are like most people after filing taxes, you might have tons of pay stubs, canceled checks, receipts, tax forms, and various other types of documentation. While you might just throw them into a folder or box and put it in the back of the closest, this might not be the best idea.
Others might think they don’t need anything once the records have been filed and will shed the papers and never take a second look. Take a look at this guide to see exactly how long you need to be keeping your tax records.
Records You Should Keep for One Year
You should hold onto all your pay stubs for a year. If you are sent your pay stubs online, you might want to print them or see if your job portal will allow you to see past pay stubs to make sure you still have access to them.
Once you receive your W-2 or 1099s, you can cross-reference everything to make sure they match. If they do, you can get rid of past pat stubs. Make sure to shred everything that has your personal information, don’t just put it into the trash.
Records You Should Keep for Three Years
The IRS officially recommends that you should keep the tax returns and all related documents for 3 years after filing the deadline. There is a three-year statute of limitations for the IRS to review your return and possibly say there are issues or problems.
You need to keep all the documents in case you get audited or there is another issue. Make sure to keep all these documents for three years:
- Sales slips, invoices, and receipts
- Health insurance forms or statements from your insurance providers
- Charitable giving records
- Form-1098 and mortgage interest statements
- W-2 forms
You should also keep information on stocks, bonds, and taxable investments if you have them.
Records You Should Keep for Four Years
If you have employment tax records that you are in charge of, you need to keep them for four years after the tax is due or paid, whichever comes later.
Records You Should Keep for Six Years
If you’re self-employed, you should keep your 1099s for at least 6 years in case you forgot to include some of your income. If you have income from foreign financial assets, you should also keep these records for 6 years.
Records You Should Keep for Seven years
Money that you loaned out to others or bad stock picks should be kept for 10 years. This is how long you have to claim a bad debt deduction.
Keeping Your Tax Records Safe
Keep all important paperwork in a waterproof and fireproof box. Make sure all computer files are backed up. If you use an online storing service, make sure they encrypt your data so that your social security number and other things cannot be made public.