How Long to Keep Records & Receipts
Whether you are filing taxes for your small business or wish to keep track of your financial investments, keeping accurate records and receipts is necessary in order to maintain a record of where your money is going. Unfortunately, failure to maintain accurate records and receipts can lead to trouble come tax season when records of your financial activity are vital to accurately determining your taxable income, tax credits and deductions.
Any and all records that are related to taxes, such as returns and records for tax deductions taken, need to be kept for seven years. This would also include canceled checks and receipts for all purposes such as mortgage interest, charitable purposes, alimony and contributions toward retirement plans. Once you have filed your returns, the IRS has three years from that date to audit your return or discover any mistakes in them. If the IRS believes you have underreported your gross income by 25 percent or more, it has six years to challenge your return. No time limit applies if you have not filed your returns at all or filed fraudulent ones.
IRA contributions need to be kept permanently. For any non-deductible contribution that you have made to an IRA, you need the records at the time of withdrawal to prove that tax already has been paid on this money.
Retirement/Savings Plan Statements & Bank Records
Depending on the type of records they are, you may have to retain them from one year to permanently. Quarterly statements from your 401(k) should be kept until you receive the annual summary. If everything on the annual summary tallies, you can dispose of the quarterly statements. Annual summaries need to be kept for as long as you have the account, or until you retire. Regarding bank records, you will need to hang on to any checks that are related to business expenses, taxes and housing and mortgage payments. Checks that have no long term importance can be discarded.
Brokerage Statements and Bills
Brokerage statements need to be kept for as long as you have possession of the securities. Keep purchase and sales slips to show a record of capital gains or losses when filing tax returns. As far as bills are concerned, once you get the canceled check from a bill that has been paid, you can shred the corresponding bill. However, if you have made any big purchases, such as jewelry, cars, computers, household appliances, rugs, furniture, collectibles and antiques, those bills should be kept in a separate file. You may require them as proof of their value, or when claiming insurance for their loss or damage.
House/Condominium Records and Receipts
If you have had your house remodeled or made any permanent improvements, additions and installations, you must keep the records of the costs and purchase price. In addition, any records you have related to expenses incurred by you when buying and selling the property (legal fees, commissions to real estate agents) should be maintained for six years after the sale of your house.
You Might wanna Check this out