What is the primary use of saved tax returns from prior years?

The primary use of saved tax returns from prior years is indeed for reference and record-keeping. Maintaining prior tax returns is important for various reasons. They serve as a detailed record of your financial history, including income, deductions, and credits claimed. This can be especially useful when preparing for the current year's tax return, as they help ensure consistency and accuracy in reporting. Additionally, if there are any questions or audits by the IRS or state tax authorities, having access to previous returns can aid in providing necessary information or substantiation.

Furthermore, saved tax returns can help individuals track how their financial situation and tax obligations have changed over the years. This historical context can also assist in planning for future tax years, such as anticipating potential tax liabilities or seeking eligible deductions. Overall, the retention of prior tax returns serves as a safeguard ensuring that taxpayers maintain accurate and complete financial documentation.