Tax Day is here and gone. Now is the perfect time to get a head start on your spring cleaning and begin the fun task of shredding all of those old tax documents. In fact, Office Depot is offering free shredding (up to 5 lbs) from now until April 25th. Click here for your free coupon.
So what are reasonable shredding guidelines to avoid hoarding, while still protecting yourself? According to the IRS, individual taxpayers should keep returns for 3 to 6 years. Non-filers and fraudsters should keep their records forever. Here’s a closer look:
The IRS states that the length of time that you need a keep a document depends on the record itself. You should keep papers that support income or deductions until the period of limitations for that tax return has expired. The period of limitations is the time during which you can amend your tax return to claim a credit or refund, or that the IRS can assess additional taxes.
Be sure to keep a copy of your filed tax return. This will be helpful in preparing future tax returns and checking calculations if you need to file an amended return. Receipts, canceled checks, and other supporting documents from income or deductions should be kept for 3 years from the due date of the filed tax return.
If you overpaid and are filing a claim for a loss from worthless securities or bad debt deduction, keep the records for 7 years.
Keep records for 6 years if you neglect to report income and it is more than 25% of the gross income shown on your return.
Keep records for 3 years if you file an amended return for a refund or credit after your return was filed.
If you are an employer, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later.
Keep supporting records indefinitely if you do not file a claim at all or if you file a fraudulent claim. If you file a fraudulent claim, you have more to worry about than your record retention schedule! There is no period of limitations for the IRS to assess taxes for these returns.
After your shredding is done, the only thing left to do is to wait patiently if you’re expecting a tax refund. The IRS estimates that 78% of tax payers will qualify for an average refund of $2,815. So sit back, relax and enjoy these IRS and Tax Day facts and statistics while you wait (and it could be a while).
- 7 Weeks: Estimated timetable for refunds for paper returns this year
- 80%: Of returns are expected to be filed electronically this year
- $3,120: Average tax refund
- 80%: Of U.S. tax filers get a federal tax refund
- 164 Million: Number of times the IRS “Where’s My Refund?” tool was accessed from Jan. 15 to March 13.
- 28 Minutes: Average wait time when calling the IRS (compared to 11 minutes in 2010)
- 52 Minutes: Average wait time on the “priority” hotline, which tax preparers call for help with clients.
- 6.1 Billion: Hours spent preparing annual tax returns
- 16 Hours: Time average 2014 taxpayer spent completing and filing their 1040 (down 47 percent since 2006)
- $260: Average amount spent completing and filing a 1040 in 2014, down 3.3 percent from 2006.
- 1931: Year Al Capone was arrested for tax evasion and sent to Alcatraz
- $93,701.57: Lindsay Lohan’s 2009 tax obligation paid off by Charlie Sheen
- $4.9 Million: R Kelly’s unpaid taxes from 2005 to 2010
- $13.3 Million: Tax liens levied against Nicholas Cage
