When to Shred Your Tax Returns?
A lot of our clients have asked the question, “How long should tax documents be retained?”. The short answer? It’s probably much shorter than most people assume. Continue reading for the long, detailed answer.
When to Shred Your Tax Returns?
In general, you should retain a tax return until its Statue of Limitation (SOL) for that tax year expires. This is a period after which you can neither file/amend the tax return or request for its audit. The SOL period is mainly dependent on three factors:
- Your Tax Agency
- Tax Type
- Situation
In regards to (i), both the IRS and your state tax agency have different tax return SOL periods. Typically, in the case of the IRS, the SOL is 3 years from the due date of the tax return or the date on which it was filed (whichever is later). In New Jersey, the SOL is generally four years.
Next up in (ii), tax type can also determine the duration of the SOL. For instance, the IRS adds an additional year to the SOL for payroll tax, granting a total of four years.
And concluding with (iii), your situation can also potentially extend years of your SOL. For instance, if it has been found that you underreported your taxable income, the SOL extends to 6 years. And, if you are charged with tax fraud or haven’t filed your tax returns, the SOL period is extended indefinitely.
How to Properly Dispose of Your Old Tax Documents?
It is ill-advised for one to simply throw away their old tax documents in the trash. Your tax documents contain sensitive personal and financial information. Any unauthorized person getting access to them can use the information to commit identity fraud or other related crimes.
Rather, the recommended course of action should always be to have them shredding before disposal. For better regulatory compliance and to avoid the risk of fines, you should hire a professional shredding service for the job. They will also provide you with a Proof of Destruction certificate, removing any potential associated liability on your side.
Best, Most Affordable Shredding Service in New Jersey
New jersey Shredding is a professional shredding service operating in most of the major cities in New Jersey. If you are interested in a top-rated, affordable solution to your business’s shredding needs, please don’t hesitate to contact us by calling on our number – (201) 371 5900.
