We use a lot of personal documents while filing our income tax returns.
After you file your return, and maybe claim a refund, you’ll want to hold onto your bank statements, canceled checks, and receipts in case the IRS audits your tax return. The IRS requires those paper or electronic records to prove you qualify for tax credits or deductions you claim.
The IRS recommends holding onto documents that support credit, income, and deduction for at least 3 years after the date that you filed. Doing so helps prepare future tax returns and provides you with documentation in the event the IRS asks questions.
It’s safe to get rid of those supporting documents after three years. Shredding those documents will help protect you from identity theft.
“How you shred and dispose of your documents is critical,” said Ray Maagaro, Liberty Tax Franchisee. “In today’s world, the identity thieves are just waiting for something to happen. Take care of your documents, make sure they are shredded properly and make sure your information is protected from the bad guys.”
Maagaro recommends going to a professional shredding company to safely, and permanently dispose of any un-needed tax documents. You can bring your old and unwanted documents to our next community shredding event, which will be held at the Big E on June 15th.
According to the Federal Trade Commission, whether an item should be shredded or not depends on what it is and the information the document contains.
You should never shred items such as birth certificates, social security cards, marriage or divorce papers, citizenship or adoption papers, death certificates, or tax returns.
However, for some documents, there is no set timeline for when you should shred them.
Here are some examples:
- Auto title- keep for as long as you own the vehicle
- Home deed- keep for as long as you own the property
- Disputed medical bills- keep until the issue is resolved
- Home improvement receipts- keep until you sell your home and pay any capital gains taxes.
Other, less important documents, however, can be shredded within a set amount of time.
- sales receipts
- ATM receipts
- paid credit card statements
- paid utility bills
- credit offers
- non-tax related canceled checks
- expired warranties
Shed after one year:
- pay stubs
- bank statements
- paid, undisputed medical bills
Shred after seven years:
- tax-related receipts
- tax-related canceled checks
- Records for tax deductions taken