Thursday, February 28, 2008

Tax Document Clinic Part 1: What to Keep & How Long

Let's get right to it...

What Records Do I Keep?

  • Tax Items: Returns, canceled checks & receipts relevant to your tax return, & records for tax deductions on your return
  • IRS Contribution Statements
  • Other Retirement Savings Plan Statements
  • Bank Records
  • Brokerage Statements
  • Bills
  • Credit Card Receipts and Statements
  • Pay stubs
  • House/Condo Records

How Long

One Year
  • Pay stubs: Keep until you get your W-2(s) and make sure everything matches. If they don't, demand an amended W-2, known as a W-2C.

Ten Years
  • Tax Items
  • Bank Records: Keep the bank records relating to tax matters for seven years.
  • Credit Card Receipts and Statements: Keep receipts until your month-end statements come, then match everything up, shred receipts, and keep statements.

Until You Sell
  • Bank Records (the ones relating to home improvements and mortgage payments).
  • Brokerage Statements (too prove capital gains/losses at tax time).

  • IRS Contributions Statements (to prove you paid tax on this money already).
  • Other Retirement Savings Plan Statements: Keep the quarterlies during the year, make sure everything matches up at year-end, shred the quarterlies, and keep the yearlies forever.
  • Bank Records (the ones relating to home improvements and mortgage payments.)
  • Bills: Keep bills of large value items (to prove value); toss bills that are more than a year old and have been paid in full (a.k.a your utility bill from 3 years ago).
  • House/Condo Records: Keep records documenting purchase price, permanent improvements, and expenses incurred in buying/selling the home. This will help you during tax time.
Seems like a lot of paper, huh? See Part 2 where I go into organizing those documents!!

Small business owner? See customized document info at A Tax Consultant for All Seasons:
What Records Do I Need to Keep?
How Long Should I Keep Records

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