Tax Records to Keep

Goodbye, Tax Season! But Wait, What Records Should I Keep?

Unless your tax return is extended, the tax filing deadline has come and gone – time to breathe a sigh of relief! But before you throw all of your tax documents up in the air to celebrate, we need to discuss just how long you should keep that information in a safe and secure place.

When we talk about tax documents, we’re talking about a copy of the tax return that was filed, along with “supporting tax return documents” — W-2s, 1099s, receipts, logs for mileage, or any paperwork that will support your tax deductions or credits that you may have claimed (all of these can be either digital or hard copies). This includes anything that was used to prove the state of your finances on your tax return. If PPG Partners prepared your return and you sent us hard copies of your supporting tax return documents, we will return those documents to you along with a paper or digital copy of your tax return.

As a general rule across the board, PPG Partners recommends that you keep your supporting tax return documents for at least seven years after the date in which your return was filed. For example, if you filed this year by the April 18, 2023, tax deadline, you should keep your 2022 supporting tax return documents until at least April 18, 2030. However, while you should hold on to your supporting documents for seven years, you should keep your tax returns permanently.

You want to maintain your documents and tax returns because you have a set amount of time to claim any tax refund that is owed to you. On the flip side, the IRS can go back a certain amount of years if they require substantiation for what you claim on your taxes.

When dealing with your retirement accounts, you should plan to keep your tax records for seven years after the funds have been completely withdrawn. You should also hold on to your documentation that long if you claim a bad debt deduction or a loss on securities that you labeled as worthless. Records dealing with property (including stocks and equipment) should be kept for seven years after the tax year that you sold the property and claimed it on your tax return.

If you refused/forgot to file a tax return, or if you filed a fraudulent tax return, plan on keeping your financial records forever. In this case, the IRS has no statute of limitations.

Some people decide to keep all of their financial records forever. With technology being so convenient, it’s easy to back up all of your financial records on your computer. Be sure you’re using strong security software. It’s a good idea to back up your financial data on a device that’s not connected to the internet 100% of the time.

If you choose to throw away your records, shredding is always good advice. However you decide to save or dispose of your financial records, remember to be safe and secure!