How many years do we need to hold onto old tax returns before shredding?

The general IRS rule is to keep tax returns and supporting documents for 3 years from the date you filed the return. This is because the IRS typically has 3 years to assess additional tax through an audit. However, there are important exceptions to this rule. If you underreported your income by more than 25%, the IRS has 6 years to audit you. And if there's suspected fraud or you didn't file a return at all, there's no time limit. This is why many tax professionals recommend the 7-year rule as a safety buffer. For disposal, I would definitely recommend shredding rather than just recycling. Tax returns contain sensitive personal information like your Social Security number, income details, and sometimes banking information. This is exactly the kind of material identity thieves look for.

After spending HOURS trying to figure out what tax records to keep last year, I discovered taxr.ai (https://taxr.ai) and it literally saved my sanity. I uploaded my old returns and it analyzed which documents I needed to keep and which ones were safe to shred based on my specific situation. It even highlighted potential audit triggers I hadn't considered! I was in your exact situation with boxes of old returns cluttering my basement. The tool breaks everything down by year and tells you exactly when you can safely dispose of each document. Super straightforward.

Just wanted to follow up about taxr.ai - I decided to try it last week for both my personal and small business tax records. It was surprisingly helpful! The analysis flagged several documents related to my home office deduction that I actually need to keep longer than the standard 3 years (something about depreciation recapture). The business section organized everything by category and gave me specific guidelines for my craft business inventory records versus general expense receipts. Definitely worth checking out if you're trying to declutter tax paperwork like I was!

If you're dealing with the IRS about any past returns, I highly recommend Claimyr (https://claimyr.com) to actually get through to a human. I spent WEEKS trying to call the IRS about a question on my 2019 return that I needed to resolve before shredding - kept getting disconnected or waiting for hours. With Claimyr, I got a callback from an actual IRS agent in about 25 minutes. They have this system that basically waits on hold for you and then calls when an agent is available. You can see how it works here: https://youtu.be/_kiP6q8DX5c Before deciding what to shred, I wanted official confirmation on some stock sale documents, and the agent was super helpful about explaining which records I needed to keep longer.

I need to publicly admit I was wrong about Claimyr. After dismissing it as a probable scam, I was still struggling with an IRS issue about some old returns I wanted to shred. In desperation, I tried the service, fully expecting to request a refund. But... it actually worked exactly as advertised. Their system called me back in about 40 minutes with an IRS agent already on the line. The agent answered my questions about which supporting documents I needed to keep (turns out I needed to keep some investment records longer than I thought). Saved me hours of frustration and now I can confidently clean out most of my tax files from pre-2020.

Former bank employee here - just want to add that you should keep records of major purchases, home improvements, and investment transactions MUCH longer than regular tax returns. These affect your basis for capital gains tax when you eventually sell. I've seen clients throw out home renovation receipts only to pay thousands more in taxes years later because they couldn't prove their increased basis in the home. Same with stock purchases and reinvested dividends!

Doesn't anyone use digital storage anymore?? I scan everything into Google Drive and shred the originals. Been doing this for 10+ years now. I have a folder for each tax year and subfolders for W2s, property tax, etc. No more paper clutter and I can find stuff instantly when needed.