Saving Your Tax Paperwork

March 26, 2008
Special Feature

Tax time can be most taxing for physicians and there's a real temptation to chuck all that paperwork once it's over. Don't do it. It's vital that you keep your actual tax returns forever. As for documents that support your deductions and exemptions, you need to

“It’s income tax time again, Americans: time to gather up those receipts, get out those tax forms, sharpen up that pencil, and stab yourself in the aorta.”

—Dave Barry

Tax time can be most taxing for physicians and there’s a real temptation to chuck all that paperwork once it’s over. Don’t do it. It’s vital that you keep your actual tax returns forever. As for documents that support your deductions and exemptions, you need to hold onto those for at least three years from the filing deadline.

That’s how long the IRS has to audit your return. If you haven’t committed any fraud, you can throw away any supporting documentation once that date has passed. But if the IRS suspects that you didn't report all your income, the Feds have up to six years to come after you.

You should also hang on to records of home improvements as well as the cost of stocks and other investments. These can affect tax returns that you may not file until years in the future. Keep year-end brokerage statements and other records on your investment portfolio for at least three years after the assets are sold.

For more information, see the IRS document, How long should I keep records?

$145,283Annual compensation needed to be in the top 5% of highest income Americans.(National Taxpayers Union)