Shred after seven years One year beyond the six-year mark of filing is a relatively safe period to destroy old tax records, however, tax returns are best to keep as long as you can in case the IRS one day claims you didn't file and requests a copy. At 7 years shred: Closed account documents.
Documents that define your personal and financial life—like your birth certificate, marriage license and tax returns—should be kept forever. Hold on to records that support information on your tax returns for seven years. Digitizing and shredding your paper documents can cut the risk of fraud and identity theft.
It's also important to note that your tax documents contain sensitive personal information, so it's best to dispose of them in the most secure way possible. Instead of simply throwing them away in the trash, shred them yourself, or use a shredding service.
Documents You Should Never Shred
To align with California's statute of limitations, residents should retain their tax returns and all supporting documentation for at least four years. This time frame provides adequate coverage in case of a state audit.
You should keep your tax documents according to the IRS's period of limitations. This period is typically three years, during which you are allowed to amend your return and the IRS is allowed to assess additional tax. However, the IRS statute of limitations is sometimes longer than three years.
In 2021, Congress lowered the threshold for reporting income on payment apps from $20,000 and 200 transactions annually to $600 for a single transaction.
Even if they're old statements, they should be shredded. Your name, address, phone number, and bank account information are in those statements, along with your habits, purchases, and banking history. Even if the account is closed, shred it anyway.
Paper shredders increase security risks. You shred your documents to prevent identity theft and maintain the confidentiality of your information. But your paper shredding machine doesn't offer the most secure method for completely destroying confidential information.
Here are a few of the most common mistakes: Using Office Shredders That Jam or Overheat – Small shredders may seem sufficient, but they often can't handle high volumes and can become a burden for staff. Storing Documents Too Long – Old files that are no longer needed should be securely destroyed.
Based on the three-year rule, in late April 2025, you'll generally be able to discard most records associated with your 2021 return if you filed it by the April 2022 due date.
Generally, the IRS can include returns filed within the last three years in an audit. If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years.
Pulping involves soaking paper documents in a bin with water for 24 hours. Then, mix the solution using a paint mixer with a drill to ensure all the pieces have completely broken down.
Choosing the Right Shredding Solution
Pacific Shredding offers flexible options for destroying tax records: One-time purge services for bulk cleanouts. Scheduled shredding for ongoing records management. Convenient drop-off locations throughout California's Central Valley.
9 Paper Documents You Should Keep Forever in Their Original Form
Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
If you have an old document that isn't mentioned above, Mendelsohn said, you're probably safe following the seven-year rule. There are exceptions. If you own a business, failed to file a tax return or get sued, you may wish you held on to every shred of associated paper. Otherwise, it can probably go.
5 Drawbacks of In-House Shredding
While some organizations may consider burning confidential documents as a cost-saving or easy disposal method, this approach is neither secure nor practical. In fact, it introduces security, legal, environmental, and safety risks that can be far more expensive than using a professional document destruction service.
Here are five document types not to shred and are better to keep – especially with services that offer offsite media storage you can trust.
Here are some materials you should not put in your office shredder.
Keep Forever
The law requires trades and businesses report cash payments of more than $10,000 to the federal government by filing IRS/FinCEN Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business PDF. Transactions requiring Form 8300 include, but are not limited to: Escrow arrangement contributions.
Most of the time, if you made less than $5,000 and you're not self-employed, you don't have to file a federal tax return. But here's what many people miss you could still get money back. For example, if your job withheld just $300 in federal taxes, filing a return could get that $300 refunded.
Key Takeaways
If a business intentionally disregards the requirement to provide a correct Form 1099-NEC or Form 1099-MISC, it's subject to a minimum penalty of $660 per form (tax year 2025) or 10% of the income reported on the form, with no maximum.