Protecting Your Tax Records

Hurricanes Harvey and Irma have demonstrated how easily tax records can be lost. What can you do to protect them? And what if you lose valuable documentation?

Document key information

Organization takes time, but it can pay off when you need key information. Make a record of key information, such as bank statements, tax returns, and insurance policies. This allows for quick access following a disaster.

Store important papers in waterproof containers, such as ziplock bags. Where possible, put information online (e.g., scan and save documents) and store it safely, with backup or in the cloud.

Photograph or videotape the contents of your home, especially items of higher value. Doing this ahead of time makes it easier to quickly claim any available insurance and tax benefits after the disaster strikes.

Reconstruct records

If you’re hit by a natural disaster or other occurrence that destroys your tax records, you’ll need to reconstruct them to:

• File your tax return
• Compute and deduct casualty losses
• Receive insurance reimbursements
• File for federal disaster assistance

You can obtain free copies of return transcripts (online using the Get Transcript Tool at IRS.gov or by filing Form 4506-T) or pay for copies of past returns (by filing Form 4506). Victims of Hurricane Harvey can expedite receipt by writing “HURRICANE HARVEY” at the top of the form used for the request. (Likely similar expedition will be available to victims of Hurricane Irma; check IRS.gov.)

Conclusion

Be sure to retain tax documents long enough to prepare returns and contest and IRS audits. Usually the IRS has three years from the due date of a return to commence an examination, but the period becomes six years if there’s an omission from gross income of more than 25%.