Tax season can be a complicated and stressful time. Determining what documents you should keep throughout the year, what papers you can dispose of, and which you should shred can be confusing. Distinguishing between these documents is important because properly disposing of private information can help prevent identity theft.
To help increase your understanding of document protection and destruction basics for tax season, we answered some frequently-asked tax document-related questions:
When to Shred
How long should I keep my tax returns?
The U.S. Internal Revenue Service (IRS) recommends keeping tax returns between three and seven years, depending on your situation.
How long is the IRS’ Period of Limitations?
The IRS’ Period of Limitations refers to the date \when the filer and/or the IRS can amend a tax return. In most cases, thePeriod of Limitationsis three years, but it extends to six years “if you do not report income that you should report” and seven years “if you file a claim for a loss from worthless securities or bad debt deduction,” according to the IRS.
How long should I keep my pay stubs?
If you receive paper pay stubs, you can shred them at the end of the year, but you should keep them until you receive and compare them to your W-2 form from your employer.
When can I shred tax documents?
The IRS recommends keeping tax records, including W-2 and 1099 forms, for at least three years. After that time, while you might want to save your tax return, you can shred your other tax documents.
How long do I keep Individual Retirement Arrangement (IRA) statements?
You should keep your IRA statements until your year-end statement arrives. Keep year-end statements for six years for tax reasons.
Filing and Shredding
What tax documents should I keep?
- Documents you should save for reference after filing your taxes include:
- Any ‘evidence’ that supports an item of income or credit on the tax return (receipts, bank and credit card statements, canceled checks, and other proof of payment).
- Deduction claims (support payments, charitable contributions, mortgage interest payments, retirement plan contributions, etc.)
- Records relating to improvements on owned property
- A copy of the tax return (it may help in preparing future tax returns)
- Automobile titles and home deeds
- Pension plan information and estate-planning documents
- Essential records such as birth and death certificates, citizenship papers, marriage licenses, divorce decrees, Social Security numbers, and military discharge papers
Do I need to shred old bills?
Yes. You can shred most bills you have paid off. As a general rule, you should shred any document that includes names, addresses, and other private information that is not needed for taxes.
Should I shred receipts?
You can shred sales receipts immediately unless they are related to taxes, warranties, or insurance. You should save any tax-related receipts for at least three years, but the IRS has up to seven years to audit you under certain circ*mstances. Save any home improvement-related receipts until you sell your home because certain home expenses may reduce your capital gains tax.
What personal documents should I shred after filing my taxes?
- Documents you can shred once you have filed your taxes include:
- Documents that are past the recommended retention period
- Documents that were converted to digital files
- Documents that no longer serve a purpose (ATM receipts, sales receipts, credit offers, expired warranties, and insurance papers)
- Documents that are available online (paid credit card statements, bank statements, utility bills)
- Documents related to paid off loans
- Scraps of paper and sticky notes containing confidential data, like passwords
Other Questions
How should I dispose of tax returns?
It’s important to never put confidential documents into the garbage can or recycling bin. Information thieves can piece together personal information found in the trash, even if you rip the paper up manually. One of the best ways to protect your privacy and prevent identity theft is to shred all unneeded tax returns.
Are there free shredding services during tax season?
To raise awareness and promote privacy protection, Shred-it® organizes Community Shred-it® events, offering free paper shredding for residents. Some Community Shred-it® events help raise funds for charity. Community members who bring documents for secure shredding might be asked for a small donation. Visit our community page to find Community Shred-it® events in your area this tax season.
How can I find my old tax returns?
If you have lost a tax return from a previous year, you canorder a copy from the IRS. Tax returns are available for the current year and three prior tax years. Delivery times for online and phone orders typically take five to 10 days from the time of the request. You can request a copyonline, by phone (800-908-9946), or by mail using either Form 4506-T or Form 4506T-EZ.
Protect Your Private Information
Learn more about how Shred-it® can help you protect your tax-relateddocuments. Contact us for afree quote.
FAQs
Once your documents have aged out of the recommended retention periods, it's safe to dispose of them. Shredding is extremely important because it ensures no one can steal your information. If you throw important tax documents in the trash, others may gain access to your sensitive information.
Should I shred tax returns? ›
It's also important to note that your tax documents contain sensitive personal information, so it's best to dispose of them in the most secure way possible. Instead of simply throwing them away in the trash, shred them yourself, or use a shredding service.
Is it true that the IRS shredded tax returns? ›
In 2021, the Internal Revenue Service (IRS) made an unwise--and frankly, disturbing--decision to intentionally destroy 30 million paper-filed tax documents without processing them.
Do I need to shred statements from closed accounts? ›
Even if they're old statements, they should be shredded. Your name, address, phone number, and bank account information are in those statements, along with your habits, purchases, and banking history. Even if the account is closed, shred it anyway.
Should you shred W2S? ›
6 year retention time
If you file your tax return and fail to report more than 25% of your gross income, the IRS can still audit you up to 6 years after you file your taxes. In this situation, you'll want to wait the full six years before shredding: W-2 forms.
Can I destroy my old tax returns? ›
Before you destroy your records that are older than three years, remember that certain creditors and even some insurance companies may require you to keep records longer than the IRS does. If you did not file a return, you should keep your tax records for that year indefinitely (forever).
How long should you keep utility bills and bank statements? ›
In these cases, keep them for at least three years. Pay Stubs: Match them to your W-2 once a year and then shred them. Utility Bills: Hold on to them for a maximum of one year. Tax Returns and Tax Receipts: Just like tax-related credit card statements, keep these on file for at least three years.
Should I keep my 20 year old tax returns? ›
Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
Can the IRS audit you after 7 years? ›
Generally, the IRS can include returns filed within the last three years in an audit. If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years. The IRS tries to audit tax returns as soon as possible after they are filed.
Does the IRS destroy tax records after 7 years? ›
Individual tax returns (the Form 1040 series) are temporary records which are eligible to be destroyed six (6) years after the end of the processing year, unless extended due to an Open Balance Due - Collection Statute Expiration Date.
With the increase in identity theft and the misuse of other people's personal information, it's more important than ever to shred your fallen loved one's documents. In fact, fraudsters steal nearly 2.5 million American identities each year to open credit card accounts, apply for loans, and open cell phone plans.
How to get rid of old bank statements without a shredder? ›
Soaking paper documents in water for one or two days and mixing it around is an effective way to make them unreadable. This dissolves the paper into a pulp that you can break up by hand. However, you'll need the space and patience to leave your documents in buckets of water in a secure place.
Should I shred everything with my name and address? ›
To protect your privacy, you should also consider shredding items that include: Names. Addresses. Phone numbers.
Should old tax returns be shredded? ›
Hold onto bank statements and canceled checks for at least a couple of years, as well as student loan statements and investment statements. For tax returns and supporting statements, shredding them after at least three years should be fine.
What records should be kept for 7 years? ›
KEEP 3 TO 7 YEARS
Knowing that, a good rule of thumb is to save any document that verifies information on your tax return—including Forms W-2 and 1099, bank and brokerage statements, tuition payments and charitable donation receipts—for three to seven years.
Do credit card offers need to be shredded? ›
Does it contain sensitive data such as account numbers, balances, or credit card numbers? If the answers to any of these questions are yes, then consider shredding it. A few things you can shred immediately: Credit card or insurance offers.
What should I do with my old tax returns? ›
Hold onto bank statements and canceled checks for at least a couple of years, as well as student loan statements and investment statements. For tax returns and supporting statements, shredding them after at least three years should be fine.
Is it OK to paperclip tax return? ›
The IRS accepts returns that are stapled or paperclipped together. However, any check or payment voucher, as well as accompanying Form 1040-V, must not be stapled or paperclipped with the rest of the return, since payments are processed separately.
Can the IRS go back more than 10 years? ›
Yes, the IRS collection statute of limitations can go back more than 10 years in certain instances.
