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Tips for Protecting Tax and Financial Documents

3 min read

3 min read

Our experts in The Tax Institute at H&R Block have provided some great guidance on what tax records to keep and for how long. However, actually securing those documents for three to seven years – or indefinitely! – may be easier said than done.

Here are a few simple rules to follow when it comes to protecting and securing that sensitive information.

1. Check the mail.

It’s simple! If you get financial documents in the mail, make sure you check your mailbox regularly or daily. This is especially important around tax time when forms like your W-2 or 1099 are arriving by mail. Where possible, it may make sense to enroll in electronic statements or online billing.

2. Take advantage of secure, online storage options.

Many financial institutions provide online accounts that store your account history and details. Make sure any financial site uses https:// which indicates it is a secured site. H&R Block has MyBlock, an online storage system where our clients can keep track of prior year returns. It’s also a portal to manage an Emerald Card and/or Emerald Advance line of credit.

The IRS has issued guidelines for the electronic storage of tax records. Any electronic system needs to be:

  • Secure – it should guarantee the accuracy, reliability and integrity of the records
  • Able to produce legible and readable hard copies
  • Organized or indexed so the material can be easily located

Records can be compressed or encrypted, as long as that does not affect your ability to locate and provide copies of the records to the IRS.

3. Implement good security practices.

Choose passwords that can’t be easily guessed. Make sure your computer has all necessary updates and security patches. Use anti-virus software. The list goes on – literally – here’s a top 10 list from the University of Santa Cruz. If you are storing paper copies, invest in a home safe or a safety deposit box at your bank. That way, someone else can’t easily access the information.

4. Duplicate, duplicate, duplicate.

Don’t store your important documents in just one place. What if the external drive or CD is lost? What if the cloud storage provider goes out of business? It’s best to have a back-up option. Remember to check in on your storage system at least once a year to make sure it’s still functioning.

5. Dispose of documents properly.

When it’s time to get rid of tax or financial documents, don’t just rip them in half and throw them in the trash (I may be guilty of this). Properly shred and dispose of them to make it very difficult for a criminal to glean any sensitive information from them.

Kelley Long, a member of the American Institute of Certified Public Accountants’ National Financial Literacy Commission, uses a “cross cut” shredder and compost the scraps in her yard – happy eating for the worms and information safety.

While it’s difficult to protect your personal information 100% of the time, these simple steps will go a long way toward making sure you aren’t carelessly exposing personal details to potential thieves.

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