3 Reasons to Keep Past Taxes - The Key to Your Financial Future
What's more likely to get you a good loan rate? The amount of money you have available to you right then or documents showing what a solid non-risk you are financially? If you answered the former, well, I have some bad news for you. As much as money on the table helps (and it does help) the fact is, the bank or lending isn't going to be lending to you just that day. They are lending to you over time. They want you to show them that, over time, you're hardly a risk at all. One of the best ways to prove that? Your past taxes.
Yes, it's true. Your past taxes can be incredibly valuable beyond the refund they gave you. Here are 3 ways:
* Refinancing current loans. Any loans you have now were based on the financial information you gave that the time. But maybe something has changed recently. Maybe the interest rates have dropped and you want to take advantage of that. Maybe the bank wants to charge you more and you want to prevent that. Maybe your money situation is better off than it was 1, 5, or 10 years ago. Whatever the reason, having your past taxes returns to show the bank is a great way to prove how little of a risk you are.
* Preventing an audit. The most common reason the IRS audits anyone is because something with their current tax return doesn't match up with their past taxes. Those sort of discrepancies really set the T-Men off. Fortunately, you can head them off at the pass: by filing good, honest tax returns and keeping copies of past tax returns around, you can easily prove where and when and how those "discrepancies" came to be. And that saves you a lot of stress.
* To get money from the government. Undoubtedly the best reason to keep your returns around for three years or money - sometimes you didn't know certain tax credits/tax rebates/tax treaties existed when you filed those old taxes. And that might mean that you missed out on a lot of money. If you keep those past taxes around when you file the new ones, you can see what rebates you might have been eligible for - and not that you failed to receive it. You can also amend those past taxes and re-file them, getting back the money that was yours all along!
As you can see, past taxes help way more often than the hurt. So don't be afraid to hang on them for a few years and see what money saving (and money earning) opportunities they offer you!
Zoe Holmes is a New York-based Midwesterner. She finds that the longer she hangs onto her past taxes, the more ways she finds to use them.
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