Your Tax Docs: What to Keep, What to Shred

Three million Americans annually report tax identity theft and the IRS has paid out an estimated $5 billion in fraudulent returns for a single year.

While cyber attacks pose a major threat, not all attackers are found online. They can sift through trash and recycling bins to hunt for personal information like a name, address and Social Security number and use what they’ve found to file fraudulent tax returns.

Free shredding offered. To help prevent this personal information getting into the wrong hands, H&R Block will host a free shred event from 1-4 p.m. Saturday, April 1, at the following Houston locations:

--14526 A Memorial Drive.

--5050 FM 1960 West, Suite 133.

--8150 Kirby Drive.

H&R Block will offer advice on which documents to keep and for how long.

“Tax and other financial documents contain some of your most important information. We are committed to protecting personal data ourselves and helping taxpayers protect their own information,” said Aldo Parodi, the firm’s district general manager.

Parodi offers these tips:

Taxpayers need to keep only a few documents indefinitely. During tax season, taxpayers often question what tax and financial documents they should shred, discard or keep.

“The good news is that taxpayers usually need to keep only a few types of documents indefinitely,” said Parodi. These can include records of business income and expenses for as long as you own the business, property sales that resulted in net-operating or capital losses and records of home improvements or other expenditures that establish basis in a home.

Three years is often sufficient for most documents. Taxpayers should keep most of their tax-related documents for at least three years. Three years from the return due date is generally the timeframe a tax return is open for review and a taxpayer could need to substantiate information on the tax return. This kind of information may include:

Proof of charitable contributions. Bank statements. Printed paystubs. Utility bills. Brokerage statements. Medical and dental expense receipts. W-2s, 1099s and other information documents. Tax-reporting statements like property or real estate taxes. Closing Disclosure statements (or HUD-1 for older sales). Mortgage statements. 1095s and certificates of exemption from the Affordable Care Act. Retirement savings annual reports. Annual brokerage statements. 

Taxpayers should save their tax returns a minimum of three years but there are good reasons to save it longer than that, for example if it has business schedules (such as Schedule C) or other information they may want to refer to in the future.

“Ultimately, whether or not you keep supporting documents, and how long you keep them, depends on whether you used them for your tax return or need them for other purposes,” said Parodi. “For instance, if you’re not deducting rental expenses or claiming a home office deduction, you probably don’t need to save utility bills.”


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