Tax season is, thankfully, over (unless of course you had to file an extension). So what do you do with all those piles of papers and electronic files you had to amass to get the job done?
Hang on to your personal federal and state tax returns and their supporting records. You can be randomly audited up to three years after the date you filed the return. But if If you've under-reported your income by 25 percent, the IRS can go six years back, or seven if you claim a loss for bad debt or worthless securities. So keep your tax documents for seven years–just to be safe. (And, by the way, you can be audited at any time if the IRS suspects you of fraud.)
Store your tax documents in a secure place, such as a locked file cabinet, a safe, or in password-protected files on your computer. Read our security software buying guide for tips on keeping your data safe. Our security software Ratings shows the free anti-malware and paid security suites we recommend.
After seven years, you may want to keep just the tax returns if you'd like to track your income over the years. Files you want to bid adieu to should be securely wiped off your devices.
Shred any paper files you throw away to protect yourself from ID theft. Use a crosscut shredder (one that cuts both vertically and horizontally) rather than a strip one, which leaves long paper bands that could be reassembled. For shopping tips, see our shredder buying guide.
Find out what other financial documents you should keep, which ones you can toss, and when. We also have a chart that shows where to store the documents you need to hold on to. The video below can also help.
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- Financial Fraud Prevention
- tax returns