CONVERGENT FINANCIAL GROUP

is a Registered Investment Advisor serving clients across the United States. We are proud to have been voted the best or among the best financial planners in Charleston and Mount Pleasant since we first opened our doors.

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3850 Bessemer Road

Mount Pleasant, SC 29466

(843) 972-4402

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  • Jeremy Ellisor

How Long Should I Keep My Tax Returns?

I received a call from a client a few weeks ago asking just that. I didn’t know the exact rules, so I looked them up and was surprised that the answer wasn’t necessarily the 7 years that I expected. Here are the 7 guiding principles to help you determine the right number of years for you…


Period of Limitations that apply to income tax returns


1. Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.


2. 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.


3. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.


4. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.


5. Keep records indefinitely if you do not file a return.


6. Keep records indefinitely if you file a fraudulent return.


7. Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.


In summary, if we assume that none of us filed a fraudulent return, it appears the basic retention period is 3 years. But if you want to be extra cautious, you may feel better with 7 years.


After reading this, I went through our personal returns. Oh, how time flies. I had over 10 years of paper records! I decided that I would keep a hard copy of my previous year’s return, and then electronically store the previous six years. It took me a little while to scan and store those old returns, but shredding the old paper and eliminating the folders upon folders of old tax returns felt wonderful. Bonus: my wife was very pleased with me for opening up some much-needed storage space in our home office. Win-win.

3 Large Trash Bags of Shredded Tax Documents

Tax season is here. It’s a great time for you to go through your old returns and start purging old documents too. When it’s time to throw out those files, do so carefully since tax documents contain a lot of sensitive information. Remember to properly destroy the old documents and if you decide to electronically store them (recommended) then do that securely as well.


Enjoy the purge!




P.S. On the note of taxes, if you “need a guy," mine is Robert Majernik. He’s been doing our business and personal taxes/accounting for years. His work is top notch and his rates are reasonable. You can check out more about him here.






Source: https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records