Most people collect quite a few financial documents during a year, so it’s no surprise that some end up being tossed, others end up stuffed in a drawer, and few actually make it to the filing cabinet. However, if you are trying you couple your tax filing with some spring cleaning, be careful! While many people think that they are done with their taxes from the previous year and they can toss it all out, they would be wrong.
As nice as it would be to toss any old records and make everything digital, there are some specific documents that you will want to keep a hard copy of, just in case of an emergency. Here are some of the top documents you should hold onto for both tax reasons and general financial reasons. Read on to learn more from the IRS tax attorneys at Tax Law Offices!
Keep Your Tax Returns
If you filed a claim for either credit or a refund (or, in other words, if you are getting money back), the IRS highly recommends that you hold onto your filing documents as well as your supporting documents for three years after you file the return. Or, for at least two years from the date you paid the tax—whichever happens later. However, many financial experts and IRS professionals will urge you to keep these financial documents for up to seven years if you are claiming a loss from either a bad debt deduction or worthless securities.
If you happened to have filed a fraudulent return or skipped filing a return altogether, it’s probably best to hold onto any supporting documents for as long as you possibly can!
Stay on Top of Your Loan Documents
Most Americans have outstanding loans or some kind, so this applies to most taxpayers. Hold onto all loan documentation until the loan is paid off! Any loans that cannot be discharged through bankruptcy, especially student loans, are crucial when it comes to this. Any promissory note will have the terms for repayment listed, and these terms remain in effect until the entire loan is paid off. Make sure to have this accessible, just in case.
File Your Bank and Credit Card Statements—and Insurance Policies!
As strange and tedious as it may seem, it is a smart decision to hold onto most monthly bills and statements for an entire year. After that time, feel free to shred the hard copies. However, you never know when you may need one of these records to support a tax filing. Health, life, and auto insurance policies should always be retained for the term of the policy. These terms are typically a year, but it’s always good to check to be on the safe side.
Think About Other Needed Records
While they are not strictly tax or financial documents, there are other records that greatly affect your taxes and finances that should be accessible at all times and never thrown away. These include birth certificates, marriage licenses, Social Security cards, divorce decrees, and any necessary estate planning documents. This may include wills and trusts!
While the instinct may be to throw everything away, it’s important to think twice before doing so. At the very least, we recommend scanning and keeping electronic copies of your bills and loan statements. Many of these places send emails with your bills connected, so store these emails in a file to access easily should you need to do so in the future. Since electronic files, especially those stored online, take up very little room, there should be no harm in keeping them for a few years to be safe.
Contact Tax Law Offices
The number one way to know what you will need in case of an IRS audit or other tax issue is to reach out to professional IRS tax attorneys. The experts at Tax Law Offices know how to understand and explain how each document may be needed, so it’s important to reach out to us the moment you are notified of an impending tax audit.
So why choose us? IRS tax attorney Jeffrey Anton Collins is an authority on U.S. Tax Code, stays up-to-date on the latest in tax court cases, and knows all about IRS tax procedures. If you are facing potential criminal tax charges, it’s time to seek experienced representation. Reach out to Tax Law Offices to schedule your consultation.