Tax season is a busy time for many individuals, as they gather financial documents, complete tax returns, and submit them to the Internal Revenue Service (IRS). Once the filing deadline has passed, it’s essential to know what documents to keep and which ones can be shredded. Failure to properly dispose of sensitive information can lead to identity theft and other security breaches.
In this article, we’ll explore what documents you should shred after tax season is over.
Tax returns
The first question that comes to mind is whether you should keep your tax returns. According to the U.S. Internal Revenue Service (IRS), you should keep your tax returns for at least three years. This is because the IRS has three years from the date of your original return to audit it or six years if you underreported your income by more than 25 percent. Therefore, it’s recommended to keep a copy of your tax returns and all supporting documents for at least three years.
However, after the three-year period has passed, you can safely shred your tax returns. It’s important to dispose of them properly by shredding them or using a secure document destruction service. Tax returns contain sensitive information such as your Social Security number, income, and other personal information that can be used to steal your identity. Therefore, it’s essential to dispose of them properly to protect your privacy.
W-2 forms and other income statements
W-2 forms and other income statements are documents that show how much you earned from an employer or another source of income. These documents are essential for filing your tax return, but you don’t need to keep them indefinitely. The IRS recommends keeping these documents for at least three years, just like your tax returns.
If you have multiple jobs or sources of income, you may have multiple W-2 forms or income statements. In this case, it’s recommended to keep them until you have filed your tax return and verified that all the information is correct. Once you have done so, you can shred these documents.
Bank and credit card statements
Bank and credit card statements are documents that show your financial transactions. You may need these documents to verify deductions, expenses, and other financial transactions on your tax return. However, you don’t need to keep them indefinitely. The IRS recommends keeping bank and credit card statements for at least three years.
If you use online banking or receive electronic statements, you can download them and save them to your computer or other storage device. You don’t need to keep paper copies unless they contain tax-related information that you need to verify.
Investment statements
Investment statements show the value of your investments, dividends, capital gains, and other investment-related income. These statements are essential for calculating your capital gains and losses, and you may need them to file your tax return. However, you don’t need to keep them indefinitely. The IRS recommends keeping investment statements for at least three years.
If you have a brokerage account, you can usually access your investment statements online. You can download and save them to your computer or other storage device. You don’t need to keep paper copies unless they contain tax-related information that you need to verify.
Receipts and other supporting documents
Receipts and other supporting documents are essential for verifying deductions, expenses, and other financial transactions on your tax return. These documents include medical bills, charitable donations, business expenses, and other expenses that you can deduct from your income. However, you don’t need to keep them indefinitely. The IRS recommends keeping these documents for at least three years.
If you have electronic copies of receipts or other supporting documents, you can save them to your computer or other storage device. You don’t need to keep paper copies unless they contain tax-related information that you need to verify.
Other documents to shred
In addition to tax-related documents, there are other documents that you should shred after tax season is over to protect your privacy and prevent identity theft. These documents may include:
- Pay stubs: Pay stubs contain personal information such as your name, Social Security number, and income. You should keep them until you have verified that they match your W-2 form, and then shred them.
- Utility bills: Utility bills may contain personal information such as your name, address, and account number. You should keep them for at least a year, but after that, you can shred them.
- Insurance policies: Insurance policies may contain personal information such as your name, address, and policy number. You should keep them as long as the policy is in effect, but after that, you can shred them.
- Expired identification documents: Expired identification documents such as passports, driver’s licenses, and other government-issued IDs may still contain personal information that can be used for identity theft. You should shred them to prevent unauthorized access.
- Junk mail and pre-approved credit offers: Junk mail and pre-approved credit offers may contain personal information that can be used for identity theft. You should shred them instead of simply throwing them away.
Conclusion
it’s essential to keep tax-related documents for at least three years, including tax returns, W-2 forms, income statements, bank and credit card statements, investment statements, and receipts and other supporting documents. However, once the three-year period has passed, it’s safe to shred these documents to protect your privacy. Other documents that should be shredded include old insurance policies, expired contracts and warranties, old credit card statements, and junk mail that contains personal information. Properly disposing of sensitive documents by shredding them or using a secure document destruction service is an essential step in protecting yourself from identity theft and other security breaches.