In cities like Atlanta, Dallas, and Miami, shredding experts at A Shred Ahead handle shredding and secure destruction of sensitive files and items for businesses of all sizes. Much of what we know about determining what documents to save and shred can be useful for individuals as well. With tax season behind us, this is a good time to go through those documents taking up space in your file cabinets and drawers, and securely get rid of old documents you no longer need. This is also the perfect opportunity to go paperless wherever you can so that next year you will have fewer pieces of paper to deal with when you do your taxes.
The IRS may audit a person’s taxes for up to three years after the filing deadline. Therefore, it is recommended that people save their tax documentations (such as W-2s and 1099s) either on paper or digitally for four years. There are some exceptions. The IRS has six years to audit your return if you underreport your gross income by 25 percent or more. If they believe a person cheated on their taxes, they can audit them at any time. The same is true for people who do not file a tax return. As for your actual tax returns, tax professionals recommend that you save them forever––either on paper or digitally.
Don’t forget that if you have items that are subject to depreciation, like furniture and equipment used for your business, you should keep your receipts for as long as the items are depreciating. Documents related to real estate should be kept for as long as you own the property. Documentation of stock sales must be kept for three years past when you report the sale on your tax return. If you are in doubt about whether or not to save a document, it is best to save it—particularly if it substantiates a deduction. We have a comprehensive list on our site of items that should be shredded if and when you no longer need to save them at https://www.ashredahead.com/why-paper-shredding/what-to-shred/.
How to Shred
Do not assume that tearing documents into tiny pieces and throwing them in the trash along with the used cat litter will deter identity thieves. They are more than willing to go dumpster diving for people’s personal financial information that can get them a hefty bit of money. If you do not want to invest in a shredder, check with your nearest office supply store or FedEx store. They generally have shred bins that they allow customers to use.
If you buy a home shredder, get a cross-cut one. They are more secure than regular strip-cut shredders. Don’t forget that safe destruction is not just necessary for confidential paper documents. Personal or financial data stored on floppy disks, CDs or other drives that you no longer need should also be securely and destroyed. Some home shredders can handle these items, although not large quantities of them.
Preparing for Next Year
The last thing you probably want to think about now is next year’s returns, but this is a good time to review your recordkeeping practices and look for ways to improve them. If you haven’t already, start a filing system, both for paper and electronic documents. It can be as simple as a folder marked “2013 Taxes.” For receipts and other documentation that you receive via e-mail, like acknowledgements of charitable contributions, create an e-mail folder to hold them until you do your taxes.
Go Paperless Wherever Possible
The IRS advises taxpayers to keep their records “in an orderly fashion” but does not require them to be on paper. Did you know that you can go paperless with just about everything now, including paychecks, bank statements, and investment documents? It is easy to set up a simple filing system on your computer. Just be sure that you either have an online back-up system like Carbonite or that you save the documents on a USB flash drive. Find out how long your bank and other financial services allow free access to statements, cancelled checks, and other records. If there are particular statements that you think you will need, save a copy of them on your own computer. Also save a copy of all of your tax return documents and keep them in your digital tax files.
Don’t forget about our services for small businesses. We offer shredding services in Atlanta and throughout the South. Whether it is paper shredding in Raleigh, NC or electronic data destruction in Dallas, TX, we can handle it. To see our locations, just go to https://www.ashredahead.com/contact-us/ and click on your state.