Record Retention and Disposal

You made it through tax season and you start thinking about the accumulation of records that you have for tax purposes – what to keep, what to dispose of, what to do.  Here are a few tips to help you do some spring cleaning:

  • The IRS generally recommends that copies of tax returns and supporting documents be kept at least three years.
  • Employment tax records should be kept at least four years after the date the tax becomes due or paid, whichever is later.
  • If your return claims a loss from worthless securities or a bad debt deduction, the return should be kept for at least seven years.
  • If you keep tax records electronically, this information should be backed up and encrypted when possible. 
  • If you keep paper tax records, they should be kept in a secure location under lock and key.
  • All paper documents containing Social Security numbers, income amounts, bank account information, etc., should be shredded to avoid the information getting into the wrong hands. 
  • Old computers, back-up drives and media should utilize the special wiping software to ensure the removal of sensitive data.  Just deleting the stored files will not remove the information entirely.
  • Do you need to keep those old utility receipts and charge card records?  Not if you can access them electronically.  Utility receipts needn’t be kept if the new bill reflects payment of the prior month and a zero balance coming forward.  Free up some closet space by shredding these receipts. 
  • Paycheck stubs are becoming a thing of the past and may be available online.  If you still receive a paper paystub, once you get the W-2 for the year, you can shred the paper stubs.

If you still have questions about retaining records, more information is available on irs.gov at How long should I keep records? 

Happy spring cleaning.

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Kay Sowa

About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent as well as a Certified Trust and Financial Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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