Retaining tax returns and the supporting documentation serve important purposes in addition to IRS audit responses. Banks turn to the information to verify income for loans. Financial assistance for education and other needs depends on meeting eligibility requirements, for which tax documents afford ready evidence. The proper way of storing tax returns takes into account preservation of returns for several years (in most cases, at least seven years), the ability of access, securing sensitive information and protecting against identity theft. In this article we will investigate whether it is safe to store tax documents on google drive and what other methods are.
Is it safe to store tax documents on google drive: The paper method
Retaining tax returns and the supporting documentation serve important purposes in addition to IRS audit responses.
Effective storage of returns should include printing and organizing them. A folder can hold each year’s returns and supporting documents. These file folders contain the tax return, accompanying schedules and forms such as W-2s, Form 1099s, K-1s and the like. Documents that support the claim of itemized deductions or business expenses include the property tax bill for land, equipment, vehicles and other personal property; receipts for overnight hotel stays or gas purchases while on business trips; and invoices for advertising or other business services.
To protect against fire, floods and other elements, investing in fireproof or waterproof safes proves to be an option. These devices store tax returns and other important personal and business financial records. Safes with either combination or key locks afford security against would-be identity or other thieves. In particular, using a combination lock or a safe that requires an access code can stop those who seek to break open safes.
The proper way of storing tax returns takes into account preservation of returns for several years (in most cases, at least seven years), the ability of access, securing sensitive information and protecting against identity theft.
Is it safe to store tax documents on google drive: Internal and external drives
As paper copies can still deteriorate or become lost, electronic storage represents a back-up approach to tax document storage. You can scan the returns and keep them on a computer hard-drive.
However, reliance solely on an internal hard drive or computer folder to store tax documents can lead to potential identity theft or security breaches. Hackers may install malware and viruses. Against these threats lie measures such as firewalls and restricting the ability of staff or others to download software or apps that might contain hidden viruses or malware. Tax returns may also benefit from password protection, which prevents computer users or those accessing it from retrieving passwords.
When a business donates, sells or otherwise stops using a computer, merely deleting the files does not guarantee that others might not access it. Instead, computer hard drives may be wiped clean through factory reset methods that on the type of device and operating system.
Using only internal storage also presents the risk that the computer will succumb to damage, permanent failure or theft.
For all of these reasons, external methods of storage can afford ready access to needed tax documents. These include USB flash drives, CDs, external storage drives or SD cards. Obviously, these storage devices should have a safe place of their own, such as a fireproof or waterproof place. It may help to place these smaller devices in an secure envelope or folder labelled with the years of the returns and information should transmission or printed copies prove necessary.
Is it safe to store tax documents on google drive: The google-drive / cloud method
Taxpayers who store tax documents in the “cloud” can access their returns from any device. This approach to storage allows for immediate access, especially if the need for the information unexpectedly arises in a meeting or other occasion. Further, the cloud brings greater memory capacity to store large volumes of returns and financial documents one area.
Yet, the freedom of access and storage afforded by cloud-based technology creates the need for strong passwords. This includes those for devices as well as the account which allows for storing financial documents in the clouds. Businesses and other taxpayers may employ different passwords for devices and for the cloud storage service to make access more difficult. In other words, merely getting into the computer, tablet or smartphone still leaves hackers or thieves another barrier to stealing information.
Storing tax records and financial information takes a mixture of paper and electronic methods. Multiple alternatives of access and preservation lessen the risk of loss of this important information.
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This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.
