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Jed Boal ReportingIt's that time of year when we gather our paperwork together and get down to the business of doing our taxes. But when we're done, what documents should we keep? And how long should we keep them?
The fact of the matter is, few of us will ever be audited, fewer than two percent. We know we're supposed to shred what we can to protect our identities these days, but when it comes to tax papers, it's better to be safe than sorry.
We all know the deadline to file our taxes, but when it comes to tax records and how long to keep tax records, it's not so clear -- three years, seven years, forever?
Charlie Roberts, Utah State Tax Commission: "As we've gone into the electronic age, there may be some confusion. People coming out of the depression kept everything forever."
If the IRS decides to audit you, you'll need tax returns and supporting documents to fend off the auditors. To protect ourselves, some accountants suggest we keep all of our tax returns indefinitely, but the IRS and the Utah State Tax Commission tell us three years is enough for most of us.
Charlie Roberts: "You should keep all records three years from the due date of the return. All records, whatever goes into your tax return, should keep it for three years."
The IRS has three years to audit you from the filing date, unless your return was fraudulent. Here are the basic records to keep:
- Proof of income -- W-2's, 10-99's, bank and brokerage statements.
- Proof of expenses -- sales slips, invoices and receipts related to your return.
- For your home, keep purchase records, mortgage statements and receipts related to improvements. If you sell the home, keep the records six years.
- For investments, keep statements and 10-99's.
Keep your W-2's indefinitely.
Charlie Roberts: "They come in handy for claiming social security. Sometimes records are lost. That's proof of income you earned during those years."
Certainly there are many unique situations. Business owners have different requirements.
If you file a fraudulent return, you're supposed to keep it forever, try to figure that out.
