Tax returns - keep for 7 years? Longer?

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reallyconfused
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Tax returns - keep for 7 years? Longer?

Post by reallyconfused » Wed Jul 06, 2011 12:23 am

I think the IRS website recommends holding onto tax returns for at least 7 years, but they reserve the right to go as far back (longer than 7 years) if they want. Am I reading this correctly? How long do you keep your returns?

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Sheepdog
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Post by Sheepdog » Wed Jul 06, 2011 4:06 am

You can find out how long the IRS recommends that you keep tax return and the supporting documents here http://www.irs.gov/pub/irs-pdf/p552.pdf .

I have all of mine for a lot of years just for personal curiosity when I want to look back. They don't take a lot of room. If it was for possible tax audit only, I would follow the IRS guidelines.
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

Sidney
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Post by Sidney » Wed Jul 06, 2011 6:42 am

I keep mine forever. For the oldest ones I only keep the schedules, not the supporting docs. Among other reasons, I need the 8606 for an IRA basis.

They don't take much room - one notebook for returns going back to the 70s.
I always wanted to be a procrastinator.

scrabbler1
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Post by scrabbler1 » Wed Jul 06, 2011 6:48 am

I have them forever, too, going back to the first return I filed for my 1985 taxes. I have the tax booklets, too, although I should probably go back and get rid of those somewhat bulky items after removing any worksheets (and tax rate tables) I completed in the tax booklets.

Uninvested
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Post by Uninvested » Wed Jul 06, 2011 7:40 am

keep them as long as you want. But I wouldn't tell anybody I had more than 3 years.

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BigFoot48
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Post by BigFoot48 » Wed Jul 06, 2011 7:53 am

I keep six years of paper returns and supporting material. When the next year rolls around I scan and shred all the important stuff from the oldest return. In recent years Turbotax has been providing PDF files so I no longer have to scan the return, just any of the supporting papers that may be useful to have.

Takes up no room!
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Jay69
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Post by Jay69 » Wed Jul 06, 2011 9:06 am

I have keeped all my forms that was sent in from when I started woking some 25 years ago. Shred all calculations/supporting docs/etc after 7 years.

I have every year scanned in as a PDF file including all supporting docs from when I started working.

This past winter I cleaned up and scanned most of if not all my old documents. 25 years of tax documetns now fit in a 2 gallon zip lock bag thats tossed in the storage area. When I'm dead and gone I think all our tax stuff will fit in that one bag, our kids may get a kick out of it when they clean out the place :wink: I even keeped my first tax booklet!

When my wife was running a in home daycare the tax file was huge and thick, those years took up so much space.
"Out of clutter, find simplicity” Albert Einstein

scouter
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Post by scouter » Wed Jul 06, 2011 10:40 am

I keep everything and it's saved my butt a few times. It doesn't take much room, just a cardboard box in the attic.

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ThePrune
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Post by ThePrune » Wed Jul 06, 2011 3:35 pm

+1 to Jay69's approach of scannng all tax documents as PDF and keeping them forever!
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Manbaerpig
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Post by Manbaerpig » Wed Jul 06, 2011 3:53 pm

might want to scan in a non-proprietary format if you truly wanted to keep them forever (tiff/jpeg/etc), yes I realize tiff is controlled by adobe :)

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Jay69
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Post by Jay69 » Wed Jul 06, 2011 4:05 pm

Manbaerpig wrote:might want to scan in a non-proprietary format if you truly wanted to keep them forever (tiff/jpeg/etc), yes I realize tiff is controlled by adobe :)
I have thought about this. I thought withl how many existing PDF files people have I would have some time to convert to something else if I really had to. It could be a pain though unless you could convert them as a batch.
"Out of clutter, find simplicity” Albert Einstein

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dandan14
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Post by dandan14 » Wed Jul 06, 2011 4:18 pm

Save as PDF. I don't know why I didn't start doing this years ago, but it makes them very easy to pull up and browse later if you need a piece of information. (Or just like good bedtime reading.) :-)

Alan S.
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Post by Alan S. » Wed Jul 06, 2011 6:08 pm

I agree - forever.
The storage space is less than the amount of space saved when all the CRTs were eliminated.

There is no statute of limitations if the IRS suspects fraud. There is no statute of limitations for an excess IRA contribution unless you filed a 5329, and virtually no one files a 5329 just to start a statute period.

But the main reason is that these forms restore details like a financial photo album.

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Steelersfan
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Post by Steelersfan » Wed Jul 06, 2011 7:33 pm

Forever is my vote.

I had to reconstruct the tax basis for a single stock that I got from my employer in my taxable account that had accumulated dividends every quarter for about 25 years.

Fortunately I had the supporting details included with my tax returns that told what dividends had been granted and at what cost by year and quarter. That made calculating an accurate cost basis pretty easy, although digging through 25 years of (somewhat) dusty returns wasn't the pleasantest task I've performed.

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joe8d
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Post by joe8d » Wed Jul 06, 2011 10:08 pm

keep them as long as you want. But I wouldn't tell anybody I had more than 3 years.
Three years is what the IRS says for legitimate returns.I never could figure out why even that when they have your returns and all the 1099's etc.You certainly should keep cost basis records for sales and other documents used in preparing returns that they don't actually have a copy of for that 3 year period.
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grabiner
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Post by grabiner » Thu Jul 07, 2011 12:03 am

joe8d wrote:Three years is what the IRS says for legitimate returns.I never could figure out why even that when they have your returns and all the 1099's etc.
If you are audited, you want to have your own original return available to prepare for the audit. In addition, if the IRS loses a document or never processes it, you will need your own copy of the document in an audit or court case.

And beyond three years, you may need the old form for records, particularly if you file taxes in a different state. I will need my 1997 W-2 to prove an entry on my 2011 and 2012 NJ state taxes.
Wiki David Grabiner

sambb
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Re: Tax returns - keep for 7 years? Longer?

Post by sambb » Sun Jan 12, 2014 1:18 pm

I have several years of them - any advice on scanning?
My documents are very numerous and returns are very long. a $500 scanner that jams wont do it.

Has anyone used document scanning service with these sensitive documents?

travellight
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Re: Tax returns - keep for 7 years? Longer?

Post by travellight » Sun Jan 12, 2014 1:36 pm

I do forever as well. Came in handy when I had to retrace all my IRA contributions because my accountant had never filed form 8606s back to 1990. My "you don't know what you don't know (you'll need)" came true.

Sidney
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Re: Tax returns - keep for 7 years? Longer?

Post by Sidney » Sun Jan 12, 2014 3:16 pm

sambb wrote:I have several years of them - any advice on scanning?
My documents are very numerous and returns are very long. a $500 scanner that jams wont do it.

Has anyone used document scanning service with these sensitive documents?
I'd check with some place like Staples and see if their copy center can scan and store to a flash drive for you. Many of the larger copy machines are essentially large scanners with built in printers. However, you need to make sure they can delete your files off their system.

After about 5 years I dump the supporting docs (1099s etc) and only save the returns and supporting schedules.
I always wanted to be a procrastinator.

john94549
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Re: Tax returns - keep for 7 years? Longer?

Post by john94549 » Sun Jan 12, 2014 3:22 pm

Forever. Some of the Form 8582, line 17 (Form 1040) booked losses we are currently harvesting date back to 1990, for example. I keep not only the returns, but also the back-up calculations.

Another example. We did a "wrap" many, many years ago on our principal residence to pay off the loan on our condo. Accordingly, the interest we have paid (and continue to pay) on our principal mortgage balance is allocated in part to our principal residence (Schedule A) and in part on Schedule E. And the percentage changes each year as the note is paid down. I can support these current allocations with records I have kept.

It's also a hoot to go back over those returns from the 60's and early 70's.

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BHCadet
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Re: Tax returns - keep for 7 years? Longer?

Post by BHCadet » Sun Jan 12, 2014 3:24 pm

I would say forever.
But, I missed couple years from my old state when I moved when I was in my 20's...

sambb
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Re: Tax returns - keep for 7 years? Longer?

Post by sambb » Sun Jan 12, 2014 3:27 pm

would you trust these documents to a kinkos or something? I am less worried about the cost of scanning, as much as I am worried of identity theft.

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CyberBob
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Re:

Post by CyberBob » Sun Jan 12, 2014 3:46 pm

Manbaerpig wrote:might want to scan in a non-proprietary format if you truly wanted to keep them forever (tiff/jpeg/etc), yes I realize tiff is controlled by adobe :)
It seems okay now since PDF was officially released by as an open standard on July 1, 2008, and published by the International Organization for Standardization as ISO 32000-1:2008.
http://www.iso.org/iso/home/news_index/ ... id=Ref1141

Bob

sherwink
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Re: Tax returns - keep for 7 years? Longer?

Post by sherwink » Sun Jan 12, 2014 5:54 pm

I'll clean out the safe later this year and toss my returns over thirty years old.

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Index Fan
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Re: Tax returns - keep for 7 years? Longer?

Post by Index Fan » Sun Jan 12, 2014 7:18 pm

sambb wrote:would you trust these documents to a kinkos or something? I am less worried about the cost of scanning, as much as I am worried of identity theft.
I wouldn't use sensitive documents on a public copier/scanner/printer. I have my own scanner (inexpensive copier/scanner/printers can be purchased for less than $50). The reason- modern copier/scanner/printers may have a computer hard drive in them and may save a copy of everything ever copied or scanned. What happens with that data is unknown, so best to not take any chances in my judgement.

I found this out while working at a library- we got new computerized and networked copy machines that could also scan and print. Very convenient, but not conducive to security IMHO.
"Optimum est pati quod emendare non possis." | -Seneca

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Toons
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Re: Tax returns - keep for 7 years? Longer?

Post by Toons » Sun Jan 12, 2014 7:23 pm

I save mine to PDF format . I think I have the last 10 years saved and backed up :happy
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cheese_breath
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Re: Tax returns - keep for 7 years? Longer?

Post by cheese_breath » Sun Jan 12, 2014 7:55 pm

I have all my returns going back to year 1. I keep the supporting documentation until I run out of storage space, and then I shred the oldest. I currently have the supporting docs for about 20 years. Time to start shredding again.
The surest way to know the future is when it becomes the past.

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midareff
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Re: Tax returns - keep for 7 years? Longer?

Post by midareff » Sun Jan 12, 2014 7:58 pm

I used to keep the paper in the days before I owned a scanner. Now I have 1996 through 2012 scanned and on hard drive + multiple backups. I keep paper about 4 years, then digital only after that.

dewey
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Re: Tax returns - keep for 7 years? Longer?

Post by dewey » Sun Jan 12, 2014 8:06 pm

I keep a running pile of the last 9-10 years to be on the 'safe' side if there is such a thing. Others I've shredded. But with e-filing I now can keep what I submit to the IRS easily going forward.
“The only freedom that is of enduring importance is freedom of intelligence…”

ddunca1944
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Re:

Post by ddunca1944 » Sun Jan 12, 2014 8:34 pm

BigFoot48 wrote:I keep six years of paper returns and supporting material. When the next year rolls around I scan and shred all the important stuff from the oldest return. In recent years Turbotax has been providing PDF files so I no longer have to scan the return, just any of the supporting papers that may be useful to have.

Takes up no room!
+1

I do this as well.

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BigFoot48
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Re: Tax returns - keep for 7 years? Longer?

Post by BigFoot48 » Sun Jan 12, 2014 9:33 pm

I will add to my 2011 comment that I also scanned all my returns back to 1965 and the important supporting documents a few years ago, and shredded all the paperwork. This will allow me to amuse myself some future day in the assisted living center. Assuming I still own and know how to operate a computer!
Retired | Two-time in top-10 in Bogleheads S&P500 contest; 12-time loser

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Watty
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Re: Tax returns - keep for 7 years? Longer?

Post by Watty » Sun Jan 12, 2014 9:57 pm

One thing to check before you throw out the old paperwork is to check to see if the social security administration has correctly updated your wage income.

This now a bit of a problem to verify since they no longer automatically send out an annual statement to everyone so you might not see that there was an error for a very long time.

I have heard of people finding out that they had some incorrect zeros for their income in their social security records for some years decades later and without your old W2’s or tax return you will have a hard time getting it fixed.

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nisiprius
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Re: Tax returns - keep for 7 years? Longer?

Post by nisiprius » Mon Jan 13, 2014 10:01 pm

I got into a messy situation in which the easiest way to follow the IRS's directions for calculating cost basis happened to be to pull the last ten years' returns to see what OID numbers I'd declared each year, so I was glad I hadn't gotten around to throwing out the old returns.

Unfortunately the old returns are a) stapled, and of course are a mixture of variable sized pages what with the W2's and all, and b) I have scanner but it's a flatbed with no document feeder... so it isn't a trivial amount of time to scan an old tax return. But it does seem as if an answer of sorts for some people would be scan 'em and keep 'em indefinitely.
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pjstack
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Re: Tax returns - keep for 7 years? Longer?

Post by pjstack » Mon Jan 13, 2014 10:52 pm

I have mine from 1956. That's not "forever", but sometimes it feels like it!
pjstack

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