6 Tips for Safeguarding Tax Records

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Finished filing your taxes? Don’t throw out your tax records just yet. 

It’s important to secure your tax records going back several years in case you need to reference them later. But natural disasters and extreme weather like hurricanes or wildfires and even cybersecurity threats can damage or destroy valuable tax records you may need in the future. Use the following tips to help you safeguard your most sensitive records.  

What Tax Records You Need to Keep

Keep copies of your tax documents including:

• Copy of your tax return
• W-2s
• 1099s
• Mileage logs
• Receipts
• Paperwork supporting your credits/deduction claims

If you file electronically, you will already have digital copies. (ezTaxReturn keeps your tax return files on record for at least 3 years). But if you filed a paper return, you should backup those records digitally. 

How Long You Should Store Your Records

Exactly how long should you keep your tax records? It depends. The basic rule of thumb is that you should keep a copy of your tax returns and supporting documents for at least three years, according to the statute of limitations outlined by the IRS. However, if you omitted more than 25% of your gross income on your return or filed a claim for a loss from a bad debt deduction, you will want to keep your records up to seven years.

6 Tips for Keeping Your Records Safe

1. Keep Physical Files Secure

Because your tax documents contain a lot of personal and sensitive financial information, it’s best to store those files securely when you aren’t using them. When working with physical papers, keep the originals in a water-tight container, fire

safe, or a bank safe deposit box. This will not only safeguard your files from getting lost or stolen, but can also provide protection in case of a fire or other natural disaster.

Pro Tip: Create a clear organization system for your files so you are more likely to notice if any documents or information is missing. 

2. Backup Records Electronically

Backup your records in a safe place away from the original copies. Keeping a backup set of records, bank statements, tax returns, insurance policies, etc. is easier now that many financial institutions provide statements and documents electronically. 

Even if the original record is only available on paper, it can be scanned into an electronic format. With documents in electronic form, taxpayers can download them to a portable backup storage device such as an external hard drive, flash drive, CD or DVD that you can take with you in the event that you need to evacuate.

3. Document Valuables

In case of a natural disaster, you don’t want to be left without a record of your personal property values. Photograph or videotape the contents of your home, especially items of higher value. 

A photographic record can help you prove the market value of items for insurance and casualty loss claims. Photos should be stored at a separate location. To document your valuables, the IRS has a disaster loss workbook, Publication 584, Casualty, Disaster and Theft Loss Workbook, which can help you compile a room-by-room list of belongings.

4. Beware of Scams

Hackers and scammers are rampant during tax season. Beware of schemes to fraudulently collect or steal your personal information. 

These can include: 

• Phone scams demanding tax payment
• Phishing schemes asking for info verification
• Fake IRS calls or messages

Any information you share with these scammers will then be stolen. Protect your tax records and personal details by knowing the signs and practicing good cybersecurity. 

This means keeping all digital records secured behind an encrypted account or password-protected file such as DOC, PDF, or ZIP file. Simply scan your documents onto your PDF and set a strong password. You can also store sensitive files on a dedicated external hard drive. If you e-file with a tax service like ezTaxReturn, your files will be automatically saved and secured for you.

5. Update Your Emergency Plans

In case of disaster, you’ll likely need to leave your home quickly. Having an emergency plan in place will help you make good decisions about what to take and where to go. The Consumer Financial Protection Bureau and FEMA have a simple disaster checklist you can use to make sure all your most important documents and belongings are accounted for and protected. 

Emergency plans should be reviewed at least once a year. 

6. Reach Out to the IRS

If a disaster strikes, affected taxpayers can call 1-866-562-5227 to speak with IRS specialists trained to handle disaster-related issues. You can request copies of previously-filed tax returns by filing Form 4506, Request for Copy of Tax Return. 

You can also request transcripts showing most line items on a return online at IRS.gov, by calling 1-800-908-9946 or by using Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript or Form 4506-T, Request for Transcript of Return.

Still need to do your taxes? ezTaxReturn makes tax filing fast, ez and stress-free.