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Keep Tax Records Safe

Keep Tax Records Safe and Secure - And Here's How Long to Keep Them

Tax filing season is here, which means many of your clients will come face-to-face with years of old paperwork – and the question of “keep, shred, toss?” It’s a great time to organize tax records so that they’re easy to find in case they’re needed to apply for a loan, answer IRS questions or file an amended return.

The IRS has some helpful guidance you can share with your clients on what records to keep and for how long. They should remember to:  

  • Keep copies of tax returns and supporting documents for at least three years.
  • Keep some documents up to seven years.
  • Keep healthcare information statements for at least three years. These include records of employer-provided coverage, premiums paid, advance payments of the premium tax credit received and type of coverage. 
  • And now is a good time to remind your clients to set up a system to keep tax records safe and organized. Tax records must support the income, deductions and credits claimed on returns. 

Your clients should have last year's return handy - here's why

As a part of IRS efforts to authenticate and protect taxpayer identity, the agency will require some taxpayers who e-file to enter their prior year’s Adjusted Gross Income or PIN and date of birth. That means it’s important for your clients to have a copy of last year’s return available. For more information, read Validating Your Electronically Filed Tax Return. They can request a free transcript for the past three tax years with the ‘Get Transcript’ tool on IRS.gov

Make sure they keep records safe - but when it's time, shred or destroy 

Whether they consist of paper stacked in a shoe box, electronic files stored on a device or in the cloud, it’s important to remind your clients to safeguard all personal records, especially anything that lists Social Security numbers. Consumeraffairs.com recommends scanning paper and keeping records stored securely on a flash drive, CD or DVD. Kiplinger features tips for creating digital files from paper. 

It’s more important than ever for your clients to keep personal information out of the hands of identity thieves. That means no tossing records in the trash or recycling bin. Home paper shredders are often inadequate for large piles of paper, but many communities have professional, secure document shredding services. Some services will even come to your location. Check them out – The Mobile Shredding Association and the National Association for Information Destruction.

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