How Long Should You Keep Old Tax Returns?

As tax season comes around, many of us wonder how long we should keep old tax returns. After all, we want to stay organized but also avoid cluttering our space with unnecessary paperwork. That’s why an interesting article caught our attention, titled “How Long Should You Keep Old Tax Returns?”

According to the article, it’s generally recommended to keep tax returns and supporting documents for at least three years, but some experts suggest keeping them for as long as seven years. This is because the IRS has up to three years to audit your tax returns and six years to press charges if they suspect you underreported your income by 25% or more. Additionally, if you need to file a claim for a loss from a worthless security or bad debt deduction, you may need to keep those records for seven years.

However, the article cautions against keeping old tax returns forever as they can take up valuable space and pose a security risk if they fall into the wrong hands. If you do decide to dispose of old tax returns, it’s important to do so safely by shredding them or using a secure document destruction service.

From personal experience, I’ve found it helpful to keep tax returns and related documents organized in a file cabinet or digital file. It can also be useful to label the files with the tax year and a description of the contents, so you can quickly locate them if needed.

In conclusion, while it’s important to keep old tax returns and supporting documents for a certain period of time, it’s also necessary to balance the benefits of organization with the risks of clutter and security. By following the recommended guidelines and practicing safe document disposal, you can stay on top of your finances without sacrificing your peace of mind.