Allen & Company PC

We always enjoy talking with current and potential customers. If you have any questions about our products and services, fill out this form and we’ll respond as soon as we can.

Feel free to contact us

Should You Throw Out Your Old Tax Returns?

Should You Throw Out Your Old Tax Returns?

Photo: Abdone,  http://www.dreamstime.com/woman-looking-stock-photos-imagefree140043

 

Some people are pack rats while others cherish a good spring cleaning and a house free from clutter and old paper work. But how long should you really hold on to your tax returns?

3-6 year rule

The common rule is to keep your tax return with all the backup documents like receipts, mileage logs, W-2s and 1099s etc. for 3-6 years following the date of filing or the due date of the return. After 3 years the IRS’ statute of limitations to initiate an audit has run out unless you have neglected to report more that 20% of your income. In this case the IRS has 6 years to initiate an audit. (If you have failed to file a return or have filed a clearly fraudulent return, the IRS is free to pursue you at any time.)

A sad story of tossed returns

You may need your records for other purposes than to defend yourself against the IRS. Eva Rosenberg’s Marketwatch April 2013 article tells a story of a teacher whose social security statements were missing retirement benefits for two of the years he had worked early in his career. Since the IRS only keeps a record of old returns for 6 years, they were not able to give him the old tax returns so he could prove that the Social Security Administration had the wrong data. The poor teacher had to put off his retirement for another two years!

Keep your tax returns forever

So to be on the safe side, save your tax return forms forever! Yes, you may scan and store them electronically. If not to correct your social security benefits, you may need the old returns to show depreciation taken, the cost of investments, or to apply for a mortgage or disability insurance. After the 6 years has expired it’s ok to do some spring cleaning and shred most supporting documents like donation receipts, credit card statements, mortgage statements, and cancelled checks.

How to get prior year tax information from the IRS: http://www.irs.gov/uac/Newsroom/How-You-Can-Get-Prior-Year-Tax-Information-from-the-IRS

Kristin Allen
Director of Marketing and Accountant
Allen & Company, PC
Kennesaw, Georgia
kallen@allenandcompanypc.com
www.allenandcompanypc.com
(770) 428-6229