Keep or Toss? A Guide for Retaining Financial Records

							Keep or Toss? A Guide for Retaining Financial Records

Are you worried about an Internal Revenue Service (IRS) tax audit? Does that worry make you keep
records too long and clutter your living quarters? If a mountain of financially related documents is
threatening to overwhelm your space and your sanity, it is time to de-stress. Document storage past a
certain time is unnecessary.

Generally, the rule of thumb when it comes to saving documents is to keep them for three to six years.
The IRS can investigate your tax returns for errors for up to three years. Wills, trust documents and tax
returns should never be discarded; instead they should be kept in a safe and secure place, such as a fire
proof safe. The IRS can investigate your tax return errors for up to three years. More than 25 percent
under-reporting of your income increases the ceiling for an IRS records request to six years. These figures
do not apply if fraud is involved. If your tax return is supported by a particular document, keep the
document for six years after the return is filed. Keep financial statements for stocks, bonds, and funds for
six years also.

You can discard paper copies of credit card bills after one month. If you do online banking, such records
are available electronically anyway for a certain period of time, and you can request copies from
previous years, usually for a small fee. Bank statements should be retained until the end of the year. The
same is true of retirement plan statements.

Keep utility bills for a month, unless you have a home office and need to calculate annual utility costs for
the portion of your home reserved for business activities. If you are employed, keep pay stubs until you
receive your W-2 from your employer. The same thought process applies to sub-contractors.

A smart way to keep receipts is to attach them to your warranty, and then discard both when the
warranty ends, unless you need them for insurance purposes.

Minko Law Office in Brooklyn can help answer questions about Financial Records, Business Planning and
other legal aspects of record management.

Experienced estate planning attorneys Brooklyn NY of the Minko Law Office offers estate planning and
business planning resources to residents of Brooklyn NY. To learn more about these free resources,
please visit www.minkolaw.com/ today.