Now that tax season is out of the way, you’re probably left with an intimidating stack of documents wondering “How long do I have to hang on to this stuff?” To shed light on this common issue, here’s a rundown on the essentials you need to know.
Tax Records
Supporting documents, such as 1099’s, W-2’s, receipts for charitable contributions, etc. should be kept for 4 years after the return was filed. For example, the documents for your 2011 return filed April 17, 2012 should be retained until April 16, 2016. If you will file on extension by October 15, 2012, you should hold on to your documents until October 14, 2016. Note that if your 1099 is attached to a brokerage statement that shows evidence of the purchase cost of a financial asset it’s is critical to hold onto the statement until you dispose of that asset.
As for the tax returns themselves, it’s usually a good idea to save them forever. They may be needed for Medicaid, immigration, pension and other purposes. They may also contain useful data in filing future returns. At a minimum we recommend retaining them for 10 years.
Original Documents You Should Keep Forever
- All versions of your living trust
- Wills and Durable Powers of Attorney
- Healthcare Advance Directives
- Birth Certificates
- Citizenship Papers
- Medical Records
- Marriage, Adoption, and Divorce papers
- Social Security Card
Electronic Storage – A Great Option
Before you go crazy trying to find space in your already overflowing file cabinets, be aware that many documents can be stored electronically and subsequently shredded. While some documents should be stored in a safe deposit box, for many (including financial records and tax returns) electronic storage is an easier, more convenient option.