Tax Returns - How Long Do you Keep?

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abuss368
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Tax Returns - How Long Do you Keep?

Post by abuss368 » Sun Nov 19, 2017 12:16 pm

Bogleheads -

I am curious how long many of us chose to retain Tax Returns. I understand the IRS rule:

1) 3 years - IRS can review for no reason at all.
2) 6 years - IRS can review if a 25% misstatement of income.
3) Fraudulent - IRS can review indefinitely.

We have historically purged these documents over time. I am curious as to what others are doing.

One big difference today compared to many years ago is the accessibility of records and statements. Many years ago everything arrived in the mail and that was your only copy. If something happened one would have to order another statement (if possible). Now, with everything in the cloud, any statement or activity can be printed for any number of years in minutes.

Best.
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TravelforFun
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Re: Tax Returns - How Long Do you Keep?

Post by TravelforFun » Sun Nov 19, 2017 12:20 pm

I keep all my returns electronically in PDF in perpetuity and shred backup documents after 7 years.

TravelforFun

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abuss368
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Re: Tax Returns - How Long Do you Keep?

Post by abuss368 » Sun Nov 19, 2017 12:21 pm

TravelforFun wrote:
Sun Nov 19, 2017 12:20 pm
I keep all my returns electronically in PDF in perpetuity and shred backup documents after 7 years.

TravelforFun
To you ever worry about your computer being exposed to "hacked" with such sensitive information available?
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DrGoogle2017
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Re: Tax Returns - How Long Do you Keep?

Post by DrGoogle2017 » Sun Nov 19, 2017 12:23 pm

At least 10 years and could be more. It pays to keep my records, one time I had to prove I hold a certain stocks for a class action law suit. My brokerage company was already closed.
All mine are paper trails.

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BolderBoy
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Re: Tax Returns - How Long Do you Keep?

Post by BolderBoy » Sun Nov 19, 2017 12:25 pm

TravelforFun wrote:
Sun Nov 19, 2017 12:20 pm
I keep all my returns electronically in PDF in perpetuity...
Likewise. I have tax returns and supporting documentation going back to 1968, all scanned into .pdf files and all backed up several times over on encrypted drives stored both on/off site. (the same with all other financial documents, checkbook registers, etc)

Not concerned about hacking.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

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BL
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Re: Tax Returns - How Long Do you Keep?

Post by BL » Sun Nov 19, 2017 12:26 pm

When we get around to shredding, besides keeping forms as above, plan to keep the basic forms indefinitely and get rid of extra paperwork, but watch for and keep anything to do with basis of items that are still owned, such as land, home, taxable funds, etc.

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Re: Tax Returns - How Long Do you Keep?

Post by midareff » Sun Nov 19, 2017 12:27 pm

I have 1996 forward. I request a transcript from the IRS as couple of weeks after I submit and then scan into hard drive when I receive it.

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Re: Tax Returns - How Long Do you Keep?

Post by abuss368 » Sun Nov 19, 2017 12:29 pm

One aspect that I wish Vanguard would improve is to hold all tax documents for longer than they were. I am of course referring to both taxable accounts as well as IRAs. The ability to obtain from there online storage would be nice. Many years ago, they only retained the prior year information. I did however notice that there are now a few years present.
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Re: Tax Returns - How Long Do you Keep?

Post by abuss368 » Sun Nov 19, 2017 12:30 pm

We have the past 10 years of tax returns. Anything before that has been shredded and discarded. We have never had a request for any information that old and many tax return items are matched with the IRS form the provider.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: Tax Returns - How Long Do you Keep?

Post by jebmke » Sun Nov 19, 2017 12:32 pm

I keep all of mine; the older ones are PDFs, mid-range are return and forms only. Last few years are complete files.

All of my tax returns (and all my computer files, actually) are encrypted.
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avenger
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Re: Tax Returns - How Long Do you Keep?

Post by avenger » Sun Nov 19, 2017 12:35 pm

I also keep everything in PDF stored locally and in the cloud. I don’t have any paper. I plan on keeping indefinitely.
Last edited by avenger on Sun Nov 19, 2017 12:47 pm, edited 1 time in total.
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Katietsu
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Re: Tax Returns - How Long Do you Keep?

Post by Katietsu » Sun Nov 19, 2017 12:41 pm

Forever.

RudyS
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Re: Tax Returns - How Long Do you Keep?

Post by RudyS » Sun Nov 19, 2017 2:57 pm

BL wrote:
Sun Nov 19, 2017 12:26 pm
When we get around to shredding, besides keeping forms as above, plan to keep the basic forms indefinitely and get rid of extra paperwork, but watch for and keep anything to do with basis of items that are still owned, such as land, home, taxable funds, etc.
me too.

minesweep
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Re: Tax Returns - How Long Do you Keep?

Post by minesweep » Sun Nov 19, 2017 3:03 pm

Backup paperwork about 10 years (forever on two separate flash drives). This question has been asked here on a number of prior occasions.
Last edited by minesweep on Sun Nov 19, 2017 3:20 pm, edited 1 time in total.

Gill
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Re: Tax Returns - How Long Do you Keep?

Post by Gill » Sun Nov 19, 2017 3:12 pm

They're not that difficult to keep. I've kept them forever going back to 1963. I have thrown out the supporting documents on all but the last ten years and those all fit in one folder. The last ten years all have individual folders with supporting documents. More than once I've had to go back to old tax returns for information.
Gill

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Re: Tax Returns - How Long Do you Keep?

Post by MikeG62 » Sun Nov 19, 2017 3:14 pm

I have hard copies of everything (return and all backup) for 6 full years. Once older than 6 years I shred all backup information, but keep the return itself. I have hard copy returns going back for 20 years (no idea what happened to the ones older than that). I must have shredded them long ago (for some unknown reason).

I do have electronic copies (pdf) of my returns (saved from TT) going back a good 15 years. I will continue to save electronic returns going forward and retain all existing ones on my computer.

So there is some duplication between having hard and electronic copies of the same returns. At some point I should get rid of the hard copies (especially the ones older than 6 years) and just retain the electronic versions.

quantAndHold
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Re: Tax Returns - How Long Do you Keep?

Post by quantAndHold » Sun Nov 19, 2017 3:15 pm

I keep them all indefinitely. Not because I think I'm going to need them, but because the one time I tried to do a purge, the very old ones were so entertaining to read that I couldn't let go.

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Re: Tax Returns - How Long Do you Keep?

Post by Dottie57 » Sun Nov 19, 2017 4:03 pm

7 years.

My taxes are extremely simple so I think it is overkill.

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Re: Tax Returns - How Long Do you Keep?

Post by abuss368 » Sun Nov 19, 2017 4:13 pm

quantAndHold wrote:
Sun Nov 19, 2017 3:15 pm
I keep them all indefinitely. Not because I think I'm going to need them, but because the one time I tried to do a purge, the very old ones were so entertaining to read that I couldn't let go.
Ha!
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Re: Tax Returns - How Long Do you Keep?

Post by grabiner » Sun Nov 19, 2017 4:40 pm

I keep supporting documentation for 6 years after the due date of the last return it could affect, but the actual returns forever because they may be needed for future records.

I needed information from my 1997 W-2 to file my 2011 and 2012 NJ state taxes. (NJ does not allow a tax deduction for 403(b) contributions, so when I contributed to my 403(b) in 1997, then rolled it to an IRA and converted to a Roth in 2010 with taxes due in 2011-2012, I needed to know how much of the IRA balance would have been non-deductible in NJ.)
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randomizer
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Re: Tax Returns - How Long Do you Keep?

Post by randomizer » Sun Nov 19, 2017 5:43 pm

DrGoogle2017 wrote:
Sun Nov 19, 2017 12:23 pm
At least 10 years and could be more. It pays to keep my records, one time I had to prove I hold a certain stocks for a class action law suit. My brokerage company was already closed.
All mine are paper trails.
What about fire risk?

DrGoogle2017
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Re: Tax Returns - How Long Do you Keep?

Post by DrGoogle2017 » Sun Nov 19, 2017 6:23 pm

randomizer wrote:
Sun Nov 19, 2017 5:43 pm
DrGoogle2017 wrote:
Sun Nov 19, 2017 12:23 pm
At least 10 years and could be more. It pays to keep my records, one time I had to prove I hold a certain stocks for a class action law suit. My brokerage company was already closed.
All mine are paper trails.
What about fire risk?
I have pdfs too but only back to 2003. But I think the IRS can provide past tax returns.

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Re: Tax Returns - How Long Do you Keep?

Post by JW-Retired » Sun Nov 19, 2017 6:41 pm

I've got the paper ones back to 1970. Quick and easy to look at any one of them on a whim. The old ones are a hoot!

In 1990 we began doing our taxes with the first of a series of software products. We welcomed that, but I can only tell it was that year by seeing when a dot matrix printer 1040 shows up in my paper files. All my tax software generated 1040's saved on the computer are unreadable prior to 2006, which must have been the first year TaxCut(?) would make a pdf file. That time frame jibs pretty well with my work experience that, without a lot of maintenance, much after 10 years your electronic data is apt to be toast.

I'm sticking with my paper archive. :D
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Re: Tax Returns - How Long Do you Keep?

Post by FreeAtLast » Sun Nov 19, 2017 6:57 pm

Seven years for documentation. Forever for the actual 1040 and State returns. As somebody above pointed out, the latter paperwork doesn't take up that much space.
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Re: Tax Returns - How Long Do you Keep?

Post by DaftInvestor » Sun Nov 19, 2017 8:07 pm

abuss368 wrote:
Sun Nov 19, 2017 12:21 pm
TravelforFun wrote:
Sun Nov 19, 2017 12:20 pm
I keep all my returns electronically in PDF in perpetuity and shred backup documents after 7 years.

TravelforFun
To you ever worry about your computer being exposed to "hacked" with such sensitive information available?
The older the info is the less sensitive. I keep all mine forever - such a small amount of storage compared to photos that it seems a no brainer not to just save.

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joe8d
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Re: Tax Returns - How Long Do you Keep?

Post by joe8d » Sun Nov 19, 2017 11:04 pm

Three Years "Required" by IRS, That's all you have to do.
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Re: Tax Returns - How Long Do you Keep?

Post by carolinaman » Mon Nov 20, 2017 8:13 am

7 years as required by IRS. If IRS finds any problems in the last 3 years, they can go back another 4 years for total of 7 years. That is my understanding.

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Re: Tax Returns - How Long Do you Keep?

Post by snackdog » Mon Nov 20, 2017 8:28 am

No point at all in keeping paper and potentially not much in digital either unless those docs are your only means of substantiating significant deductions. Most deductions can be proven by records from a mortgage lender or property tax assessor, so unless you have exotic deductions it may be safe to shred it all and forget about it.

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Re: Tax Returns - How Long Do you Keep?

Post by Small Law Survivor » Mon Nov 20, 2017 8:41 am

Forever (me too)

Although I admit, I've never had to research anything in a return more than five years old, and even that was a very minor issue.

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Re: Tax Returns - How Long Do you Keep?

Post by jebmke » Mon Nov 20, 2017 8:55 am

joe8d wrote:
Sun Nov 19, 2017 11:04 pm
Three Years "Required" by IRS, That's all you have to do.
Until you need something off the older ones.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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John151
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Re: Tax Returns - How Long Do you Keep?

Post by John151 » Mon Nov 20, 2017 1:00 pm

I have my returns and supporting documents going all the way back to 1973, the first year that I filed income taxes. They don’t take up a lot of space, and I don’t see any good reason to throw them out.

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Re: Tax Returns - How Long Do you Keep?

Post by user5027 » Mon Nov 20, 2017 1:03 pm

I have most if not all, at least back to the early 1980's. Can't recall if I ever needed them.

So far social security has my earnings record correct. If they ever drop off say 10 years, the first place I will look is my tax returns to prove them wrong. With my voting record I would hate to have to ask the IRS. 8-)

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Re: Tax Returns - How Long Do you Keep?

Post by baconavocado » Mon Nov 20, 2017 1:24 pm

BolderBoy wrote:
Sun Nov 19, 2017 12:25 pm
TravelforFun wrote:
Sun Nov 19, 2017 12:20 pm
I keep all my returns electronically in PDF in perpetuity...
Likewise. I have tax returns and supporting documentation going back to 1968, all scanned into .pdf files and all backed up several times over on encrypted drives stored both on/off site. (the same with all other financial documents, checkbook registers, etc)

Not concerned about hacking.
Same w/me.

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Re: Tax Returns - How Long Do you Keep?

Post by missingdonut » Mon Nov 20, 2017 2:33 pm

I keep all tax returns and most documentation of those returns.

Those of you who do purges of backup documentation, beware that you need to keep documents supporting items that carry into another year. For example, if you contribute to a Roth IRA, you need to keep the documentation of your contributions (i.e. Forms 5498 or other documentation) until after you turn age 59.5 because if you need to pull money out of the Roth early you may need to defend your basis in the Roth.

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Re: Tax Returns - How Long Do you Keep?

Post by tampaite » Mon Nov 20, 2017 3:38 pm

abuss368 wrote:
Sun Nov 19, 2017 12:16 pm

I am curious how long many of us chose to retain Tax Returns.
1 year.

I scan them immediately after filing taxes and then, shred them the following year.

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Re: Tax Returns - How Long Do you Keep?

Post by tetractys » Mon Nov 20, 2017 4:07 pm

Electronically going back since that was possible. Hard copies since the time we could file on a postcard. I don’t know the exact dates off hand. — Tet

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Re: Tax Returns - How Long Do you Keep?

Post by soccerrules » Mon Nov 20, 2017 4:17 pm

I have keep hard copies of all tax returns and will probably do so going forward. They do not take up much space. I also enjoy the fun of looking back when we "didn't have 2 nickels to rub together"

I have 8 boxes that hold each of the past 8 years receipts, papers etc. I shred the oldest box each December.
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Re: Tax Returns - How Long Do you Keep?

Post by Toons » Mon Nov 20, 2017 5:53 pm

I have the last 10 years stored in digital format.(No paper)
No need to discard ,they don't take up very much space


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Re: Tax Returns - How Long Do you Keep?

Post by abuss368 » Thu Nov 23, 2017 10:47 am

This has been a very good and informative thread with lots of good information.
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JBTX
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Re: Tax Returns - How Long Do you Keep?

Post by JBTX » Thu Nov 23, 2017 6:17 pm

DrGoogle2017 wrote:
Sun Nov 19, 2017 12:23 pm
At least 10 years and could be more. It pays to keep my records, one time I had to prove I hold a certain stocks for a class action law suit. My brokerage company was already closed.
All mine are paper trails.
While not tax records I once had to access medical expense records that were about 7 years old to participate in a class action and resulted in a 5 figure settlement.

As to tax returns I keep them forever but beyond 7 years ago I thin out most of the extraneous information. Income info could be useful for social security income history.

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Re: Tax Returns - How Long Do you Keep?

Post by whodidntante » Thu Nov 23, 2017 8:32 pm

I don't see a reason to destroy my tax return documents. I don't need space that badly.

LeeMKE
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Re: Tax Returns - How Long Do you Keep?

Post by LeeMKE » Thu Nov 23, 2017 11:11 pm

I am curious how long many of us chose to retain Tax Returns. I understand the IRS rule:

1) 3 years - IRS can review for no reason at all.
2) 6 years - IRS can review if a 25% misstatement of income.
3) Fraudulent - IRS can review indefinitely.
You are required to provide backup documentation if audited in the first 3 years.
If you have the backup documentation, you must provide it if audited up to 6 years. But if you don't have it any longer, the burden of proof is on the IRS.

Which do you want to do?

In my case, having to justify an entry on an old tax return by riffling through a box of receipts from 4 or 5 years ago, would be pretty difficult. I can barely keep straight this year's approach I'm using for why I put certain items in certain categories. Ergo, I destroy the backup documents promptly after 4 years. The tax returns I have always kept.
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Re: Tax Returns - How Long Do you Keep?

Post by LarryAllen » Thu Nov 23, 2017 11:16 pm

I keep e-copies only. Backed up multiple ways. I do not keep hard copies. I do not see the need for keeping hard copies for any years.

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Re: Tax Returns - How Long Do you Keep?

Post by ccieemeritus » Fri Nov 24, 2017 3:22 am

I’m going through my parent’s files after Mom passed away. I found all their income tax returns back to 1959.

I currently have all of mine back to 1986.

Since I’m taking 4 boxes of my parents files off to an industrial shredder, I may take all my tax forms prior to 2005. My goal is to keep my papers down to one file cabinet. It’s getting tight so time to cull it.

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Re: Tax Returns - How Long Do you Keep?

Post by Caduceus » Fri Nov 24, 2017 5:54 am

Just scan everything and keep everything forever. I think tax returns are important to keep even if the IRS doesn't need them because they serve as a roadmap to help you understand what was going on in your financial life that year.

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Re: Tax Returns - How Long Do you Keep?

Post by scrabbler1 » Fri Nov 24, 2017 10:22 am

I do my returns on paper although since 2014 I have been using the fill-in version of the forms so they are saved as pdf files on my PC. I keep 5 years of the full workfolders in my file cabinet. Earlier than 5 years I have stripped out unnecessary paper, mainly the tax booklets (minus any worksheets and tax tables) which take up most of the bricks. This leaves me with the returns and bare minimums of worksheets and supporting documents going back to 1985, the first year I filed tax returns.

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Re: Tax Returns - How Long Do you Keep?

Post by Peter Foley » Fri Nov 24, 2017 11:35 am

I purge supporting documentation after 7 years with the exception of documentation related to rental property cost basis. I have just the 1040's for about the last 30 years.

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Re: Tax Returns - How Long Do you Keep?

Post by abuss368 » Fri Nov 24, 2017 1:02 pm

JBTX wrote:
Thu Nov 23, 2017 6:17 pm
As to tax returns I keep them forever but beyond 7 years ago I thin out most of the extraneous information. Income info could be useful for social security income history.
Hi JBTZ -

We have printed our Social Security Statements once a year and verified the trailing income information. I have included this statement in the annual folder each year.
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abuss368
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Re: Tax Returns - How Long Do you Keep?

Post by abuss368 » Fri Nov 24, 2017 1:05 pm

ccieemeritus wrote:
Fri Nov 24, 2017 3:22 am
My goal is to keep my papers down to one file cabinet. It’s getting tight so time to cull it.
That was one of my motivations for starting the thread. I simply am struggling to see the need for multiple years of tax returns. Everything is filed with the IRS and beyond in most (if not all cases) 6 years, there is no need.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: Tax Returns - How Long Do you Keep?

Post by abuss368 » Fri Nov 24, 2017 1:07 pm

Peter Foley wrote:
Fri Nov 24, 2017 11:35 am
I purge supporting documentation after 7 years with the exception of documentation related to rental property cost basis. I have just the 1040's for about the last 30 years.
This is a good rule. When applying for a mortgage (or any loan where there is a requirement) the borrower will request a Tax Return from the IRS. They do not want copies for your records.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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