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Now that the tax season is over, you may be wondering what to do with your tax records.  Do you shred them or keep them?  The best advice is to hold on to your tax return and supporting documents.  How long you’ll need to store them depends on a few different factors.

Store your pay stubs for 1 year

Don’t just toss your pay stubs aside once you cash your check.  Save them until you can match the information to your W-2.  Once you’ve verified that the totals are correct, then you can shred them. 

Keep your tax return for at least 3 years

It’s important to keep a copy of your tax return and supporting documents for at least three years after you’ve filed.  Generally, if the IRS has questions about your return or need to assess additional taxes, they’ll do it within this time frame.  It’s also the period in which you can amend your return to claim a credit or deduction you may have missed the first time around.  Save anything that can verify your income, credits, or deductions.  For example, your W-2 or 1099, tuition payments and charitable donation receipts.

6 years if you didn’t report all your income

Before you fire up the shredder, understand that the three-year rule doesn’t apply to everyone.  If you omitted more than 25% of your gross income on your tax return, the IRS has six years to perform an audit.  So, hold on to your records until the window closes.

7 years or more

If you file a claim for a loss from worthless securities or bad debt deduction, the IRS recommends keeping your records for at least seven years.  If you don’t file like you were supposed to or filed a fraudulent return, the IRS can hunt you down indefinitely.