There they sit, taking up valuable space in our desk drawers and storage cabinets. We all have years’ worth of tax paperwork in our homes, and it begs the question — do we really need to keep it?
The short answer is yes, to some extent, according to new information published in MONEY.
The magazine recommends hanging on to old returns forever, as they could come in handy in the future. You’ll be glad to have them if you need to file an amendment, and you can use them as references in later years.
Other tax documents — 1099s, receipts for charitable giving and so on — can be thrown out after three years. However, the IRS recommends keeping them for at least seven, as that’s how far back the agency can look into your history. According to Money, “the (IRS) helpfully suggests that you keep your paperwork if you’ve filed a fraudulent return, underreported your income or just didn’t bother to file a return.” (But we don’t do any of those things, right?)
However, you can still reduce all that clutter in your home office. Store your tax returns and other documents in digital format on your hard drive, effectively eliminating the need for all that paper. H&R Block says the IRS will gladly accept digital versions as long as they are easy to read.