Z is For Zip Drive Storage

July 7, 2022

Z is for Zip Drive Storage

Springtime has traditionally been the time to clean your shelves and closets and generally return our homes and offices to orderly chaos.

Tossing out all your old documents after filing your tax return and receiving your refund or making your payment is tempting. However, it’s essential to keep your records for at least three years and, in certain situations, longer.

Go paperless! Yep, zip drives or flash drives are still around. However, many taxpayers prefer to use offsite storage or cloud storage. Either way works.

So, no matter which option you choose, you need to have a system for storing your tax and financial information data.

So, what should you keep? The general rule is:

It would be best to hold onto your tax returns and supporting documentation until the statute of limitations runs out to file your tax returns or file for your tax refund.
Supporting documentation for your tax returns includes your forms W-2 and 1099. As well as; bank and credit card statements, other receipts, invoices, mileage logs, imaged checks, proofs of payment, and any other records to support deductions or credits you claim on your return.

Some taxpayers feel more comfortable hanging onto original papers; however, you can scan your records and store them electronically. Your scanned or electronic records must be as exact as your paper records, and you must be able to reproduce the documents if needed.

A backup system to your paper documents is always a good idea. Losing records in floods and hurricanes, moves, and basement or attic storage went bad (pests and humidity are real threats to paper) is a real possibility.

Reconstructing records isn’t always difficult, but it’s generally pricey, time-consuming, and often tricky. Therefore, it is vital to plan and have a backup system that works for you. You never know when it will come in useful.

If you are unsure about what to toss, check with your tax pro. For more information, contact us.

Jeffrey Schneider, EA, CTRS, ACT-E, has over 40 years of experience assisting taxpayers that find themselves with tax complications.

If you owe more than 10K, contact us today to set up a free strategy session, during which time we can assess your tax situation and determine how we can help you eliminate your tax nightmare.