Tax records: What should you keep and what can you shred?
April 15 has come and gone and you have piles of paperwork. What should you keep and what can you shred?
Sandra Block, a senior associate editor at Kiplinger.com, points out that the IRS has up to three years after the tax filing deadline to audit you. So she says, you should hold onto any documentation that supports your deductions -charitable receipts, credit card statements, canceled checks, debit card transactions - for at least that long.
If you are self-employed, keep those records for at least six years.
"That's because if the IRS concludes that you have under-reported your income by up to 25 percent, they have six years to audit you. So hold onto those things for a little bit longer," Block said.
And what about your tax returns? Block says it's smart to keep them forever.
"Regardless of the rules, these are just really good documents to hold onto because you may need them if you apply for a mortgage or if you apply for disability insurance," Block said. "You don't have to keep the paper forever, you can put them in a digital archive, but the actual tax return you should keep."
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