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Tax Tip Tuesday; how long to keep your tax records

If you’re like many Americans, paper piles up at home. You may have stacks upon stacks of old mail, bank statements, credit card statements, random printouts, and even copies of your personal tax records. So what can stay and what should go? 

In most cases you should plan on keeping personal tax returns and any supporting documents for a period of at least 3 years following the date you filed or the due date of your return, whichever is later. So currently, if you filed by the due date, the tax periods of 2018, 2019, and 2020 should be retained. Supporting documents for those returns such as W2s, 1099s, documents supporting deductions, business records of income and expenses, and any other documents used to prepare your return should also be kept.

Keeping personal tax returns and their associated records for a three-year time period is tied to the IRS statute of limitations. Under the statute, you generally have the later of three years from the date the original return was due or two years from the date you paid the tax, to file a claim for refund. Likewise, the IRS generally has only three years from the filing date or due date of the return (whichever is later) to audit the return and assess additional tax.

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There are some cases in which you may need to hang on to your personal records longer than three years. For instance, you should plan on keeping records related to property you own for three years after you dispose of the property. This includes real estate as well as stocks, equipment, and other assets.

Before getting too excited and throwing your old returns away, check to make sure you do not need to keep them for other purposes. Certain creditors and even some insurance companies may require you to keep records longer than the IRS.

If you do decide to get rid of tax documents, make sure you dispose of them securely, such as shredding them. Tax returns contain sensitive information that identity thieves love.

If you have questions and would like help from the Tax Professionals at H&R Block, please call your local H&R Block office. In Manchester TN call 931-728-9462. H&R Block Has Your Back! 

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