Another thing you should never ever throw away is tax returns. While you can request a tax return transcript for the last three years, you’ll find yourself in deep trouble if you are not able to show the prior years’ tax returns if you get audited or need proof from tax returns for social security benefits. “Technically speaking, the IRS is only allowed to audit the last three years, but there are exceptions,” says Parent. “Some exceptions would be a previous audit, foreign income or investments, home and property records, or if you under-reported your earnings one year,” says Parent. For situations like this, Parent suggests hanging onto those documents for a minimum of seven years and up to “forever.”
Foreign income or investments
“Foreign bank and financial accounts have to be saved for five years minimum,” says Parent. You should know that the penalty for not reporting the income is of up to 50 percent of the account’s value, therefore it’s in your best interest to have proof by holding onto the documents.