Tax documentation can really clutter up your office space or hard drive, as well as being a huge security risk if stolen. However, there are a lot of rules on how long you need to keep tax documents before shredding them.
As a certified data destruction service, we’ve created a handy guide about what you should keep or shred each tax season, allowing you to safely and securely get rid of anything you no longer need.
Keep For One Year
There are a few items you only need to keep for one year, such as pay stubs and monthly brokerage statements. Make sure you check pay stubs against your W-2s and brokerage statements against 1099s and yearly statements before shredding.
Keep For Three Years
There are many tax documents that can be shredded after three years, including your W-2, 1099, and 1098 forms. It’s also time to get rid of bank statements, as well as receipts for deductions and charitable donations.
You can also get rid of tax returns after three years, as well as any documentation to support them. The exception is if you failed to report more than 25% of your gross income for a year, in which case you should hang on to all the documentation, including W-2 and 1099 forms, for an extra three years.
Keep For Four Years
It’s a good idea to shred employment tax records at this point. You need to keep them either four years after the tax is due or four years after it’s paid, whichever is later.
Keep For Six Years
As mentioned above, if you failed to report more than 25% of your income, this is the point where you can shred the documentation for that tax year.
Keep For Seven Years
Most other tax documents can be shredded after seven years, including canceled checks, payroll vouchers, and records from bad debt claims.
There are a few items you should keep permanently, such as depreciation schedules and documentation for any tax return you never filed.
The rules and best practices on shredding or keeping documents can be difficult to understand, but it’s vital for the security of your business that you follow them. If you’re researching data destruction companies already or are simply interested in keeping your business safe, get in touch with Keystone Technology Management to discuss your options for secure, environmentally-friendly data destruction.