Between Jan 1 and April 15 of each year is what is considered by us American’s as tax season. Whether you love it (get a return), or hate it (owe), one thing they both have in common is a lot of paperwork containing your personal information. Birthdates, social security numbers, and banking documents are just a few of the valuable pieces of material thieves look to get their hands on, and for obvious reasons. Once tax season comes to an end you’ll probably ask yourself, “Hmmm.. what documents can I get rid of, what do I keep, and for how long?”
Common Documents Used to Complete Annual Tax Returns
- Previous years tax returns (Fed, MI, City)
- 1099 for interest or dividends
- Child Care statements
- Student loan interest
- College tuition
- Mortgage interest
- Property taxes paid
- Cash and non-cash donations
- Proof of health insurance
What Tax Documents Can You Destroy and When?
When you file taxes, hang on to your pay stubs and your W-2 from the past year. Additionally, keep any brokerage statements if you have to file 1099s in order to ensure accuracy. Once you have filed your return, those documents can be destroyed.
After three years feel free to go back and destroy all W-2 documents, 1099 forms, receipts for charitable donations and any other information used for tax filing over that time frame.
In case of any discrepancies in your previous tax filings and to play it safe depending on your individual situation, you may choose to hold on to your W-2’s, 1099’s, and records of business expenses over the last six years. If you have history of an audit, you may gain peace of mind by holding on to these documents longer than you really need to. At this point, it is all personal preference.
In conclusion, annual tax documents should be kept for at least three years. Don’t stress too much if you get selected for an audit. Knowing you have kept the required documents, you’ll be able to verify your return. When the three years has past, ensure you destroy your documents properly.