Every year, taxpayers wade through piles of financial documents to find the information they need to file their taxes. But what happens to all that paperwork once you’ve mailed your return? How long do you have to keep your records in case of a tax audit or some other reason at a later date? While there are few hard and fast rules, the New Jersey Society of Certified Public Accountants (NJSCPA) notes some general guidelines you can follow:

Don’t Tear Up Those Tax Returns
There are good reasons to keep copies of your tax returns indefinitely because they contain a lot of valuable information that you may need in the future, including a record of past income, deductions or taxes paid. Supporting documents, such as cancelled checks and receipts, may also come in handy later on. Technically, the Internal Revenue Service (IRS) can challenge your individual tax return up to three years after it is filed (and longer if it suspects tax fraud or intentional underreporting of income). Lenders may also ask for some earlier returns when you apply for a loan. As a result, your tax returns are among the documents you should consider keeping for a minimum of 10 years.

Retirement Details
There’s no requirement to retain your retirement plan statements or contribution records, but they do show what you have saved and what you can expect to receive when you retire or close the account. Keep quarterly account summaries until you receive your annual statements, then toss the quarterly statements but only if the annual summaries are correct. When you make a nondeductible contribution to your IRA account your records will document you paid taxes at the time of the contribution, so you don’t have to pay them later when you withdraw the money. You must report nondeductible contributions to a traditional IRA on Form 8606 filed with your tax return. Retain a copy of each Form 8606 filed.

Regarding Receipts
Throw out ATM and credit card receipts as soon as you receive your account statement verifying the transactions. However, keep receipts, credit card statements or images of cancelled checks for any big-ticket items — such as jewelry, electronics, appliances or cars. You may need these to file an insurance claim in the event of theft, damage or loss. It’s also a good idea to keep receipts for any home improvements. If you are subject to capital gains taxes when you sell your home, you may be able to lessen that tax hit by documenting improvements.

Protect Your Privacy
When you decide to dispose of any financial records, ensure you are not revealing personal information. Identity thieves have been known to search through trash bags seeking Social Security or bank account numbers. A shredder can mitigate this risk. If you don’t want to make that investment, carefully tear up your documents before you throw them out, taking particular care to destroy any sections that contain sensitive account information or other identification. And remember to store all sensitive documents in a safe deposit box or fireproof safe.

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