Old Tax Returns

[dustym]

I am being buried with old copies of tax returns. Don't want to buy more file cabinets and don't have the space for any more boxes.

How long are we required to hold onto clients copies of past tax returns. I wouldn't destroy those business returns with depreciable assets but what about the others.

Thanks

[JoshinNC]

3 years

Circular 230

[Brian EA]

I am being buried with old copies of tax returns. Don't want to buy more file cabinets and don't have the space for any more boxes.

How long are we required to hold onto clients copies of past tax returns. I wouldn't destroy those business returns with depreciable assets but what about the others.

Thanks

Why print hard copies. Keep them on disc

[Matt Sova]

Why keep any paper.

Get an Electronic File Cabinet program. I use File Cabinet Solution by Creative Solutions. Have all old crap scanned in, any thing that I print gets printed there, client docs get scanned. 99 and 00 I was partially paperless (tax returns only) then starting in 01 completely paperless.

If I did not do that I would have a room full of file cabinets.

Another program I have seen out there is one called e-file cabinet. Not sure how good it is though.

[OldJack]

You should keep in mind that only paper is the best safe permanent record.

[veritas]

State of Oregon

4 yrs

[veritas]

You should keep in mind that only paper is the best safe permanent record.

Why is paper the only safe way? I have an associate who's entire office was destroyed by fire. I have a complete copy of all tax returns off site (electronically) off site all the time.

[LawrenceGR]

I like Paper

It seems to me that as a program get outdated or you get a new computer it isn't always easy to retrive the files out of your old computer. I tried using a CD for awhile but the disc didn't always cooperate, so I'll just keep paper copies maybe buy a fireproof cabinet. I have used tax programs that did funny things from one year to the next, printed paper doen't change.

[skhyatt]

Pdf

Another option is to save the return in PDF format. When I print the returns, I always print a copy to a pdf file also. You can then copy those pdf files from your hard drive to a CD-R or DVD-R. I would make two or three copies of the CD-R and store at least one offsite if possible. The advantage of pdf is you don't need the software to be installed to access the returns. I still print out a hardcopy, but at least for now, I have the room.

[Matt Sova]

Paper

Is hardly safe at all. Quality File Cabinet software coupled with a top notch, off-site backup is your best bet. Sure you can have all the fire proof file cabinets you want at how much per cabinet? Oh, and where do you store all of those cabinets? What about the cost of paper, toner, wear and tear on your printer, etc.?

Changing hardware and evolution of the software are just another way of saying "I am afraid to change".

[OldJack]

Changing hardware and evolution of the software are just another way of saying "I am afraid to change".

I have client paper tax returns that are 40 years old and have had at least 10 computer changes since. In general I don't think you can expect that there will be software 40 years from now that will read your current pdf files. Ok... I agree nobody wants to see a 40 year old tax return, but then I have on occasion to find basis for certain assets purchased back then when the client can only remember what year he bought the stuff.

[Matt Sova]

Disagree

If the platform changes and nobody uses Adobe and pdf's anymore the software itself (which is proprietary) will be upgraded and all files contained therein will be as well. Just like when Adobe comes out with an upgrade.

[OldJack]

I just cleaned house a couple of years ago and through away 100's of 5.25 floppy disks that I can no longer read as I have no drive that size. Also, the database and spreadsheet software that created most of the floppy disks went back to the 1980's and are no longer sold or available. I can still read my paper tax returns.

[TAX]

Agree

I was talking to IRS agents at the IRS forum. They (Agents) told me that in case of an audit, you must produce a copy of return - Electronic or paper. BUT if you can not produce electronic copy (cd, disk, hard drive etc.) you may be penalized. So I would encourage both: computerized as well as hard copy.

Also, consider e-mailing copy to yourself - Have Google Gmail account for this purpose only. I doubt if Google will crash!!!

[Matt Sova]

I've upgraded

I just cleaned house a couple of years ago and through away 100's of 5.25 floppy disks that I can no longer read as I have no drive that size. Also, the database and spreadsheet software that created most of the floppy disks went back to the 1980's and are no longer sold or available. I can still read my paper tax returns.

When 5.25 were going out they had the 3.5's and we all moved toward that. Then to CD/DVD format. In fact, now, I have nothing stored on removable media. Everything is server based (hard drive space is cheap). The server has mirrored hard drives as well as tape backup using top of the line backup software. The tapes are removed and taken offsite with daily, weekend and month end tapes I have plenty of redundancies in place. So the question I have for you is, if you have a fire or flood, how do you restore your data?

Matt