With the tax season finally receding in memory, many of us now have previous year’s financial data buried quietly on our hard drives. Most of us need last year’s tax files for the current year’s taxes, but you should also make a backup you can find easily. You should save it as the original file from the tax program you used and, create a PDF, in case your software disappears.
If you used Intuit’s TurboTax for 2008, they recommend you open the return and choose Save As from the File menu, and create another copy for posterity. To make sure you can open that file from a Mac or PC, make sure you add the .tax2008 file extension to your saved file.
How Long to Save Taxes
Have you ever thought about what would happen if the IRS decided to audit you? While some records need only be kept for three years, you should keep your tax records for up to seven years. The length of time recommended depends on the period of limitations for a particular problem.
The IRS Publication 552: “Record Keeping for Individuals,” states: “You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this means you must keep records that support items shown on your return until the period of limitations for that return runs out.” Yes, in that same publication the IRS also states that if you receive W-2 wage forms, you should keep your Copy C until your social security benefits kick in. For some of us, that could be more than 40 years!
CD/DVD for Backup
The question remains, what do you use to backup your files? Burning files to CD AND DVD may last for some years and you should create backup media of your taxes, as insurance. Your experience may vary, but I have some CDs, only five years old, that no Mac will read today. So, I suggest you duplicate your discs and move your files from one disc to another every couple of years.
Hard Drive for Backup
A hard drive, used sparingly may last for years. I can attest to that. I have a seven-year old OWC Mercury Elite Pro Classic drive that still functions flawlessly. I use it weekly to back up my music files. My three-year old OWC Mercury Elite-AL Pro Quad Interface drive, holds my photo library backup. A 1TB version of this robust drive is on sale now.
The bottom line is, make multiple copies of your tax and other important files using different kinds of media and copy the files from an older solution to a newer one every couple of years. Plus, you can’t go wrong with a hard drive solution from OWC.
Please realize, we’re posting this information as a courtesy only and are in no way are representing ourselves as tax advisors. Any tax questions should be referred to a licensed tax attorney, your accountant, the IRS, or the company who develops your tax software.
Thanks for sharing such great tips. I totally agree with using backups especially online backups because any external HDD could be damaged easily. For me Safecopy backup, http://www.safecopybackup.com, is a perfect fit. I can backup all my files from both my Mac and Pc with just only one account. I can also backup my USB drives and share files as well. It’s a very nice product and a good way to keep my files safe.
VM, While we think paper lasts for years, you must be careful what paper you use. My great great Aunt wrote a family history for me and when I tried to open those folded pages less than 10 years later, the pages started to break and crumble. Stored in a filing cabinet, the paper had dried out. Seems that some paper is also not reliable over time.
The most important component of any backup is the ability to read and recover with that backup.
I remember using tapes and being unable to read one out of a set of tapes in a backup.
When you say “other media” I would include paper as anachronistic as that sounds. No one can easily read 8 inch floppies, but paper survives for decades with ease.
Amen to that article Sister! I keep several copies on backup drives, in my DVD archives and finally a printed copy in my hard copies of my Tax return files. I know it makes a nightmare of work for my archive department (me) but at least the boss (me) can sleep easier knowing that redundant copies are all where they belong!