How long do you need to keep tax documents?

Advice from someone who just survived an audit 😱

Readers often ask: How long do you really need to hang onto your tax documents, and how do you keep them organized?

Photo by Wesley Tingey on Unsplash

I come to you today from the rubble of a state tax audit (cue the scary music). I may be worse for wear, but we thankfully emerged unscathed with no adjustments. My CPA and I did a (very mild-mannered) victory dance when we received the final decision.

Before I black this unpleasant months-long experience out of my mind forever, I want to share some CPA-approved lessons I learned.

What I Learned From My Tax Audit

1. Digitize everything. You don’t need to hang onto physical copies, and in fact digital versions are preferable because receipts fade with time. The decluttering fairy is pleased with this news.

   I use Dropbox* to store all my files in the cloud. The Dropbox app has a “scanner” function that turns your phone’s camera into a surprisingly great document scanner. I drop everything into folders organized by year: