With tax season upon us, many people are not sure which tax documents they need to keep and which ones to shred now. If you are a business, you should have a retention schedule that tells you which documents to keep and which documents to shred. However, employee payroll records are often tax documents, and those should be kept for up to seven years. As an individual, you should keep most tax documents for at least three years, while you need to keep some for up to six or seven years. If you are an individual, you might need shredding services once per year, while businesses, depending on the type of business, might need our services every week.
What Tax Documents Can I Shred?
You might have this conversation about shredding tax documents every year with yourself. What do you keep and what do you get rid of? How long do you keep certain documents? Some documents can go through document destruction as the blades of a shredder sooner than others.
Keep tax returns for three years.
Keep supporting documents, including W-2s and receipts that support deductions for three years.
If you have proof of income that you did not report, keep that proof for six years.
Documentation relating to property claimed on your taxes should be kept for seven years.
While you are not required to keep documents such as bank statements and canceled checks, it is a good idea to keep them for a year in the event you or the bank finds a mistake. If you are planning on making a large purchase, such as a house, you should keep your bank statements for two years.
Your accountant might advise you to keep your returns and documentation for seven years, but the IRS can only go back three years for an audit, unless they find you didn’t report some income. And, if the IRS believes you filed a fraudulent return, it can audit you as far back as it wants.
Before you clean up your files and get the old documents ready for document destruction, decide whether you want to keep your documents for longer than three years. You might need some of last year’s documents for this year’s taxes. Go through your files and separate those documents you need to save, those you need to complete this year’s taxes and those that are ready to be shredded. Keep the old documents in a box that is locked up until you are ready to shred.
Is Shredding Tax Documents Secure?
When you get shredding services from a NAID certified shredder like Royal Document Destruction Services, shredding your tax documents is safe. However, if you use the home shredders, or even some shredders in business offices, your documents are not as safe. Shredders targeted to the home or small business are usually strip shredders. This means that your documents are only cut into strips, and with little effort, a criminal could piece the documents back together.
Contact Royal Document Destruction
After you are done with your taxes, contact Royal Document Destruction to discuss your shredding needs. If you are a business, we provide secure shredding boxes to keep old documents in until our scheduled pickup time. If you are an individual who doesn’t need frequent shredding services, we can arrange to pick up your documents or you can drop them off.