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Which Tax Documents Do I Need to Keep?

by Caldwell Trust

With the huge amount of people doing their taxes online or via an accountant, it is easy to simply stuff your paperwork in a drawer or a filing cabinet, out-of-sight, out-of-mind. In many cases, when we prepare our taxes online or have a version emailed to us, we may also rely too heavily on our computer to save a version. When we do, we risk losing the documents to the trash, a lost or broken hard drive, or a forgetful mind. Instead of falling into this trap, have a plan to save the following tax documents in a place that is protected from natural disaster, computer mishaps, or a lapsed memory.

The Tax Documents You Need to Keep After Tax Season

Income Tax Returns

The IRS recommends that you keep your return for three years from the day you filed your return or two years from the date you paid the taxes. You should extend your tax returns to six years if 25% of your income is omitted, and keep the returns forever if the tax return is fraudulent. This is for your protection in case of an audit, which normally occurs in a three-year period (or six years if the issue is deemed substantial).   

Non-Deductible IRA Contributions

Form 8606, which reports nondeductible contributions to your traditional IRA, along with any other supporting documents that prove your contributions to that IRA account, should be kept forever. This is so, in case of an audit, you can prove that you paid the taxes towards your contributions. However, you may toss these documents once you close out the IRA.   

Sale of Home Tax Documents

When going through the confusing and stressful situation of selling and closing your previous home, the last thing you want to think about is what to do with all the paper associated with it. But the sale of your past properties should be considered one of the most important documents you have. Keep any document related to the sale of your home forever in one location. This may include a bill of sale, HUD-1 Settlement, and ALTA statements.  

CPA Audit Reports

Requesting a CPA perform an audit of your business or personal finances is usually done because you believe that something is not right (such as a mismanagement of funds). For the peace of mind the audit gives you or for the information it reveals, it is important to keep these documents on hand forever. In the future, it may serve as a way of having a thorough, comprehensive, and professionally done backup report.

file cabinet important documents

Why You Should Store Paper Copies of Your Documents

Overall, this may seem like a lot of paper to keep for a prolonged period of time, especially when you factor in the other personal items you should keep. However, any of several situations—a divorce, a death, an audit—may require having these past forms and checks on hand at a moment’s notice.

Keeping Paper Documents Safe

To keep these documents and your personal information safe, save them in a secure location, such as a fireproof safe, and only divulge the location to the people on your need-to-know-basis list, such as a spouse or estate manager.

About Caldwell Trust Company

Caldwell Trust Company is an independent trust company with offices in Venice and Sarasota, Florida. Established in 1993, the firm currently manages over $850 million in assets for clients throughout the United States. The company offers a full range of fiduciary services to individuals, including services as trustee, custodian, investment adviser, financial manager and personal representative. Additionally, Caldwell manages 401(k) and 403(b) qualified retirement plans for employers.

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