Whether you use old-fashioned manila filing folders, a flash drive or cloud storage, tax and personal finance authorities agree on the importance of saving tax documents and records. In addition to using the information for preparing your next income tax return, it may come in handy years from now.
"Your tax data is helpful and often required in many non-tax financial situations," says TaxACT spokesperson Jessi Dolmage. "For instance, insurance companies, lenders and creditors often use tax information to verify income and asset value. Form W-2s can provide proof of income if your Social Security benefits are less than what they should be."
Information to save for your next tax return
Organizing and saving information throughout the year will cut tax return preparation time and can even save you money. Save any information related to:
While you don't need a fancy or high-tech organizing system, you do need to keep the information in a secure place. Consider saving electronic copies to the cloud or on a backup storage device in addition to, or in place of, your paper files.
"One of the key advantages of going digital is that your tax information is better protected from natural disasters," says Dolmage. "Saving electronically also means you can access the information anywhere from a mobile device."
Apps and websites make digitizing documents easy. TaxACT DocVault is a free mobile app and website specifically designed to create and save secure, digital copies of tax documents. At tax time, import DocVault images into TaxACT Deluxe to save with your return.
What to keep after filing your taxes and how long
Knowing what information to save and for how long can be confusing. As a general rule of thumb, keep tax returns and related documents for at least three years from the April 15 filing deadline.
Certain documents should be saved longer. "Information related to your home, property, investments and retirement plans should be kept indefinitely," says Dolmage. "If you dispose of an asset, be sure to keep the information for another three years."
Business owners should keep tax information for at least four years. That includes employment records, gross receipts, invoices, bank statements, proofs of purchase, asset records, databases, emails and even voicemails.
Refer to IRS Publication 552 at www.irs.gov for more information about tax recordkeeping, Publications 583 and 463 provide specific information for businesses. Visit www.taxact.com/apps to download TaxACT DocVault for free.
January 1 — Everyone
Federal Holiday (New Year's Day) - Details
January 12 — Employees who work for tips
If you received $20 or more in tips during December, report them to your employer - Details
January 12 — Communications and air transportation taxes under the alternative method.
Deposit the tax included in amounts billed or tickets sold during the first 15 days of December 2014.
January 14 — Regular method taxes
Deposit the tax for the last 16 days of December 2014.
January 15 — Individuals
Make a payment of your estimated tax for 2014 if you did not pay your income tax for the year through withholding (or did not pay in enough tax that way). Use Form 1040-ES - Details
January 15 — Farmers & fishermen
Pay your estimated tax for 2014 using Form 1040-ES - Details
January 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in December 2014
January 15 — Nonpayroll withholding. January 20 — Everyone January 27 — Communications and air transportation taxes under the alternative method. January 29 — Regular method taxes
If the monthly deposit rule applies, deposit the tax for payments in December 2014.
Federal Holiday (Birthday of Martin Luther King, Jr./Inauguration Day) - Details
Deposit the tax included in amounts billed or tickets sold during the last 16 days of December 2014.
Deposit the tax for the first 15 days of January.
January 20 — Everyone
January 27 — Communications and air transportation taxes under the alternative method.
January 29 — Regular method taxes