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What Tax Documents Do You Need To Save After Filing?

What Tax Documents Do You Need To Save After Filing?

March 30, 2023

After completing your taxes for the year, you may be left wondering what to do with all of the records, receipts, and statements that have accumulated over the past twelve months. The IRS recommends holding on to any documents related to the income you're reporting or any deductions or credits you're claiming, such as:

  • Proof of income: W-2s, 1099s, bank and brokerage statements, K-1 forms, and records of spousal-support payments.

  • Bills and invoices: credit card statements, canceled checks, mileage logs, and receipts.

  • Financial records related to real property: paperwork from the purchase or sale of a home and all documents associated with the costs of buying, selling, or managing rental properties.

  • Investment records: records related to stock transactions, IRAs, and other retirement accounts.

If you're unsure whether to keep a document or not, it's best to err on the side of caution and store it in your files. The length of time you should keep these documents varies depending on the action, expense, or event they relate to. The IRS has the right to review all tax returns filed during the Period of Limitations, which is typically three years from the date you filed for any given year. During this period, you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax.

However, it's worth considering keeping some documents for longer than three years. For example, the IRS recommends keeping employment tax records for at least four years after related taxes become due or are paid, whichever is later. Keep your property tax records until the period of limitations expires for the year you dispose of the property. Retain your tax returns and related documentation for six years or more if you have reason to believe you may have under-reported your income by 25% or more.

To ensure you have access to these documents in case of loss or damage, it's a good idea to create digital copies and store them in a secure location. This will provide you with a backup in case the printed version is lost or destroyed.

If you have any questions or need help managing your financial records, don't hesitate to contact us. We're here to work with you and your tax professional to help keep your financial records up-to-date and create a personalized financial plan tailored to your habits and lifestyle.