Aside from worrying about how long to save supporting documents and paperwork, you also need to think about what exactly must be saved. Beth Logan, a tax professional and enrolled agent with Massachusetts-based Kozlog Tax Advisers, says you should keep everything that ‘proves’ what’s on your tax return.
“Important items include W-2s, proof of the purchase price of the assets on your return, proof of the losses, business books with receipts or proof of payments,” Logan said. “If you take the standard deduction, then you can throw away your donation receipts and medical receipts because you did not claim these deductions.”
She also advises that when someone comes into extra cash, such as a tax refund, they should put 40% toward debt such as credit cards, put 40% into savings, and 20% toward having a good time, "Or else what's the point of being alive?"
