Your Taxes and Identity Thieves

Once again we've come to that time of year of agonizing, complaining, would rather cut off your left foot then sit down and do your income taxes. Just as the sweet smell of spring rides in the wind and buds adorn winter bare tree limbs, we begin the yearly ritual of gathering tax information.

Identity thieves are also preparing for the onslaught of discarded paper trails just waiting for them in dumpsters, garbage bags waiting for a ride to the local dump or a simple, innocent piece of paper tossed into the recycle container at the curb. Only about 9% of identity theft happens online, the rest is a result of a carelessly abandoned credit card stub, pay stub or any piece of paper containing personal information anyone wanting to steal your identity can use.

With all the year end documents households will gather together to prepare their federal and state income taxes, the wealth of information available could make an identity thief drool in anticipation of a good day's work. You can stop identity thieves in their tracks by knowing what you should file and what you need to destroy.

W-2s and 1099s, along with your tax returns for the last ten years should be kept in a safe place in your home. A file cabinet, desk drawer or a file box work well, but if possible, a fireproof box is recommended. You should keep everything in one place in case you need to produce them for an audit. The IRS can go back three years to challenge a tax return and six years to conduct an audit.

Bank statements that support your tax returns. These need to be kept with your taxes for any possible IRS audits as well for at least ten years. Any other statements that have nothing to do with your taxes can be discarded at the end of each year. Discarded, by the way, does not mean thrown in the trash or recycle bin. Shredded. Good home shredding machines can be bought everywhere these days and are affordable.

Credit card statements related to your taxes. You should hang on to any statements showing a purchase of any large item purchases. Appliances, jewelry, electronics, computers, etc.. You may need them for any warranties on those items. Any donation contributions put on your credit card will need to be kept for tax purposes. Shred all other statements after you've gone over them.

If you have any taxable investment statements. Keep year end statements and shred monthly and quarterly statements only after receiving your annual statements.

Any retirement plan contribution like a Roth IRA or a non-deductible IRA need to be kept forever. If you don't have your copy, you could be forced to pay taxes on them again when you withdraw them for your retirement.

Keep current insurance policies, copies of wills and any other legal documents forever.

It's not necessary to keep copies of pay stubs unless you plan on buying a home. Even then, you only need three months to present to your lender. Your pay stub is the perfect paper trail an identity thief needs to steal you blind. Do not leave your pay stub laying around for prying eyes and never toss your stub into the wastebasket at work or in any public place. Take it home and shred it.

If you don't need a canceled check for your taxes, shed checks after a year. ATM receipts should be shredded after you balance your checkbook.

Remember, an identity thief is not always deterred by shredded documents. Someone who is determined to steal your information may be willing to spend hours matching and taping torn and shredded papers together to retrieve vital information needed to steal your identity. When purchasing a shredder, make sure to buy a model that can shred not only paper, but credit cards and CDs as well. Some models will produce pieces that are almost impossible to put back together. Don't ever assume someone won't try to attempt to take the puzzle pieces and restore your information. Be prudent when discarding your shredded information.

Most people will never be faced with an audit from the IRS and tax season usually comes and goes without a hitch, if you've prepared for the dreaded event. The common advice is to hold on to your tax returns for seven years, however, the IRS can go back as far as ten years to look at your taxes, so make sure to keep all relevant information and any documents that backup your tax returns for a decade. When it comes to taxes and the IRS, it's best to be safe than sorry.

Michael Estrin, How Long To Keep Financial Records, Askmen.com

How Long Should You Keep Financial Records, The frugal law student

Kimberly Lankford, How Long To Keep Tax Records, Kiplinger.com