One of the most common questions we receive from concerned taxpayers is "how long do I need to keep tax records?" Whether you are new to filing taxes or have just heard conflicting answers, our accountants are here to help.
Our Pittsburgh North Hills / Wexford Tax Pros can help you with complicated tax matters and extensive tax preparation. Contact us today at (412) 931-1617.
The Internal Revenue Service has released general guidelines and information for taxpayers to help them understand how long to keep tax returns and other documents. According to IRS.gov:
The IRS generally recommends keeping copies of tax returns and supporting documents for a minimum of three years. Employment tax records should be kept at least four years after the date that the tax becomes due or paid, whichever is later. Tax records should be kept at least seven years if a return claims a loss from worthless securities or a bad debt deduction. Copies of previously-filed tax returns are helpful in preparing current-year tax returns and making computations if a return needs to be amended.
How to Safely Keep Tax Records for Future Filing, Amendments & Audits
Tax records should be kept safe and secure regardless of whether they are stored on paper or kept electronically. Paper records should be kept in a secure location, preferably under lock and key, such as a secure desk drawer or a safe. Records retained electronically should be backed up electronically and encrypted when possible. The IRS also suggests scanning paper tax and financial records into a format that can be encrypted and stored securely on a flash drive.
How to Dispose of Tax Records
Tax records contain sensitive data such as Social Security numbers, income amounts and bank account information. Tax documents not properly disposed of can land in the hands of criminals and lead to identity theft. Once past their useful date, records should be disposed of properly by being shredded before thrown away. Old computers, back-up drives and media contain sensitive data so use a special wiping software to ensure the removal of sensitive data.