Wednesday, February 29, 2012

How long do I keep my tax forms, home and mortgage records?

How long do I keep my tax records? 

Since we are into tax filing season, and as a homeowner who has accumulated paperwork from purchasing my home and refinancing several times, I wanted to do some research into how long I needed to keep my records in case I had an IRS audit. 

Unless it suspects fraud, the IRS generally cannot launch an audit more than three years after an individual tax return (six years for those who own their own business). 

Nonetheless, it is best to keep all copies of your annual returns forever.  Tax returns will come in handy if you get into an argument over your income with the IRS or with the Social Security Administration (SSA with filing for benefits at some future time).

How long do I keep my home documents?

Keep the final settlement statements you received when you first purchased your home.  Keep these until you sell the home.  Because home improvement costs can be added to the "adjusted cost basis" of your original purchase price, keep your receipts and cancelled checks on home improvements you have made.  This record keeping can save you thousands of dollars in taxes by offsetting taxes you may owe when you sell. 

If you take a home office deduction, keep copies of records for at least 3 years in case of an IRS audit.

How long do I keep mortgage records?

Mortgage statements can be shredded as can past refinance records; save your most current mortgage refinance papers and the rest can be tossed.  As I mentioned above, save your original purchase documents until you sell the home. 

Call or e-mail me and I can refer you to a CPA or book keeper if you need additional help with questions you might have.  Happy tax filing!  :)

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