We’re down to the eleventh hour: Tax Day is coming up on April 18. If you’re one of the millions of Americans filing electronically, watch out! A popular e-file tax site was caught spreading malware for weeks. Here’s what you need to know.
Do you keep copies of important personal documents? If not, tax season is a great time to begin.
How long should you keep tax records?
The IRS recommends keeping your returns and any supporting documentation for three years after the filing date or two years from the date you paid the tax, whichever is later. After that, the statute of limitations for an IRS audit expires.
The number goes up to six years if you do not report income that you should, and it is more than 25% of the gross income shown on your return. Important documents are not just limited to taxes. Think car titles, living wills, insurance papers, business licenses and property deeds. You get the idea.
Here are a few ways to safely keep your records.
RELATED: Preparedness tip: How to digitize your most important documents
Store critical files on your computer
Storing records locally means you know exactly where they are at any time and can access them instantly. But there are drawbacks:
- If your hard drive fails, you could lose everything.
- A hacker who gets into your computer could access those documents and learn far too much about you.
You could store everything in a removable hard drive or thumb drive and keep it in a safe place. It won’t make your data immune to hard drive corruption or house fires, but at least no one can access it when disconnected.
If you go the local route, you’ll need encryption. 7-Zip is free software that lets you encrypt and compress files. Here’s how it works:
- Right-click on the file you want to encrypt and select 7-ZIP > Add to archive.
- Select Encryption in the new window.
- Select your encryption method of choice — like AES-256 — and enter a password to encrypt the file.
- Want to make an encrypted archive? Click OK. Your encrypted file will have a .7z extension.
- Next, verify the encryption by right-clicking on your encrypted archive and selecting 7-Zip > Open archive.
- Enter your password to make sure it works.
Keep this in mind: The security of your encrypted file depends on the strength of your password. Use these 10 tips to secure your accounts with strong passwords.
Our pick for cloud storage
Storage options like Google Drive, iCloud and Dropbox are free, but are they the best choice? We say no, for a couple of reasons:
- If you use Google Drive or iCloud, you’re likely signed in automatically on all your devices. What happens if you lose your phone or your laptop is stolen?
- You never know who’s watching. When you sign up for one of these accounts, you agree to terms and conditions that likely allow your documents to be analyzed.
If you do choose to go that route, take as many precautions as possible. Protect your account with a strong, unique password and set up two-factor authentication. Don’t stay automatically logged in on all your devices, and be sure to set up alternate contact information in case your account is hacked.
But your best bet to secure confidential documents is an encrypted backup option. Our pick is IDrive, a sponsor of The Kim Komando Show.
IDrive uses industry-standard 256-bit AES encryption for transferring and storing data. You can also set your privacy to the highest level by creating a private key for your account during signup. That means no one but you will have access to your data. You just can’t get that level of privacy with iCloud or Google Drive.
With IDrive, you can back up all your PCs, Macs and mobile devices into ONE account for one low cost. Save a whopping 90% when you sign up at IDrive.com and use the promo code “Kim” at checkout.
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