Don’t toss your tax returns (including your 1040 and supporting tax forms); you should keep them forever. They can provide important information in the future -- if, for example, you need to provide tax information when applying for a mortgage or getting disability insurance. You can keep the paper forms or digital copies.
But go ahead and ditch supporting documents three years after the tax-filing deadline. That includes credit-card statements, canceled checks or receipts to show deductions, letters from charities reporting gifts, and paperwork reporting mortgage interest or capital gains distributions. See IRS Publication 552 Recordkeeping for Individuals for more information about tax records.
And there are a lot of other financial documents you can toss (or, even better, shred) even sooner, if you don’t need them for taxes. You can get rid of monthly brokerage statements as soon as you check the numbers against your year-end statement, credit-card receipts as soon as everything matches up with your monthly statement (unless you need to keep them for tax purposes, such as documenting a business expense) and pay stubs after they match up with your annual pay reported on your W-2 (but save your December pay stub if it shows charitable contributions made by payroll deduction).
You can also dispose of copies of your utility, phone and cable bills as soon as the next month’s bill arrives reporting that your payment has been received (but keep utility bills with your tax records if you’re taking a home-office deduction or with your house records if you’d like to show prospective home buyers the cost of maintaining your house). You may not need to keep some files at all if they are easily accessible online -- utility, credit card and loan statements are generally available online for a year or more.
Hang on to a few tax-related documents more than three years:
Some people keep all of their tax records for up to six years if they’re self-employed, especially if they have income from a variety of sources. The IRS has up to six years to audit people who neglect to report more than 25% of their income.
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