Spring Cleaning (April 2014)
As temperatures begin to rise, people often begin the spring cleaning phenomenon. During the months of March and April, people also taxes on their mind as well. How long do we need to keep old tax records, anyway? I know people that can proudly display all their tax records for the last twenty years. Then there are those that are lucky to have their records for last year.
The short answer is that tax records should generally be kept for 3 years, but keep the W-2s forever. The two times you should keep tax records indefinitely per the IRS website is when you do not file or a return or file a fraudulent return. Hopefully, no one files a fraudulent return. If you file a return and fear there could be questions about your income, keep those records for six years.
W-2s should be kept forever because your social security is based on these amounts. If you believe the Social Security office has an error with your income, it is good to have the W-2s. Also, keep the annual statements on bank accounts and retirement funds forever. Not only can the records provide information in case of a problem, but it can also be enlightening to see how the amounts grow over time. If you receive pay stubs, keep them until you receive your W-2s. Other financial information is much more readily available than in the past so you don’t need to keep monthly bills or bank statements.