How to Save Tax Documents — Digitizing Is the Answer

So where do you keep all those tax documents? There are several potential solutions—but only one truly makes sense.

You could sort through your tax documents every few years, carefully retaining papers that are potentially valuable and shredding the rest…but that would be time-consuming, and there is always some risk that something potentially useful will be shredded. You could keep all your old tax documents forever…but that would take up space, and moving these files will be a major annoyance if you relocate.

Better: Make digital copies of your paperwork, then shred the original paper documents. Once you’ve made these digital copies, save them forever and pass them along to the executor of your estate.

To digitize your documents: Buy a fast, high-quality scanner for around $400—choose one that has an automatic document feeder so you don’t have to handle one page at a time. Example: Fujitsu ScanSnap scanners are excellent.

Save your scanned documents in PDF format using the software that comes with the scanner. Be sure  to scan and save them at high resolution. That way, they can be printed should the IRS request to see hard copies of any documents. Save the PDFs to a storage device that you keep in your home, but also back them up to a cloud storage service to ensure they remain safe even if your home is destroyed in a disaster. Cloud storage options include Microsoft 365/OneDrive, Google Drive, Dropbox and iCloud. Generally, you can get adequate storage for less than $10 a month.

There also are companies in many areas that can scan and shred documents for you. These companies tend to focus on corporate clients, but some accept relatively small jobs from individual customers as well. A local office-supply or FedEx store might offer scan-and-shred services, too, but consider whether you want to lug all your documents to such a store and trust its employees with your sensitive data.