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How Long Do I Need To Keep Tax Returns
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How Long Should You Keep Tax Returns?
It’s easy to get into the habit of hoarding financial documents on the grounds that one day, you may need them again. But if you want to keep your finances in order, be wise with what you keep—not everything has to go to your grave with you.
For example, certain items like ATM receipts can be discarded after one month, while pay stubs and investment account statements must be kept for at least one year, or until you verify accuracy with a W-2.
However, items like annual tax returns must be filed and kept forever—the IRS has three years to conduct an audit, but it could happen at any time if there’s a chance your income has been underreported.
Please refer to the table below for when to keep each of the most important financial documents:
Earnings Before Interest And Taxes (ebit): How To Calculate With Example
While you can safely store most banking, tax and investment documents on your computer or hard drive, you should always have physical copies on hand for these items:
Tanza is a CFP® Professional and a former Personal Finance Insider correspondent. She breaks down personal finance news, writing about taxes, investing, retirement, wealth building, and debt management. She publishes a bi-weekly newsletter and column answering readers’ questions about money. Tanza is the author of two ebooks, The Financial Planner’s Guide and A One-Month Plan to Take Control of Your Money. In 2020, Tanza served as editor-in-chief of Master Your Money, an original, year-long series offering financial tools, advice and inspiration to millennials. Tanza joined Business Insider in June 2015 and is an alumnus of Elon University, where she studied journalism and Italian. She lives in Los Angeles, where tax season is in full swing. We have 1099 forms ready for our clients and are collecting records to send to our clients tax preparers. In the spirit of the season, we’ve put together a handy infographic guide to print out and stick on your desk. This guide can help you decide which tax records to keep, how long to keep them, and the best way to keep them safe. To get 2017 off to a good start, follow this guide to help you organize and keep your tax files on track for years to come.
If you have questions about taxes, the Internal Revenue Service (IRS) has helpful information on its website. Check out their online interactive Tax Assistant tool for answers to frequently asked questions about the tax law. Remember, the federal deadline to file your taxes is Tuesday, April 18, 2017.
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What Should I Keep And For How Long?
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How Long To Keep Business Tax Records And Receipts
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How Long To Keep Payroll Records
Remember, the IRS recommends keeping tax-related documents for at least six years. If an error is suspected, it can be reviewed up to six years after submission, and you will need proof of purchase if this happens.
Determining how long to keep financial records depends on several factors, including the type of record and whether it is for personal or business documents. Whether you keep records for 1 month or 10 years, record keeping best practices require that you store documents electronically (as paperless as possible) and always protect your files by storing them in the cloud. At Mazuma, our accounting experts help our clients store and organize important financial information in a secure online portal so that the information is never lost and can be easily accessed.
Below is a detailed summary of how long financial records are kept, sorted from least to longest.
The key to successful record keeping is staying organized. Establish an effective monthly system and you’ll be more likely to stick with it. For example, write the type of expense on each receipt and put it in a separate file each month. You will need to keep utility bill receipts, bank statements and deposit slips until you receive your monthly statement. Once you have time to review your statement, you can delete the receipt.
How Long Should You Keep Your Tax Returns
In the event of a dispute, identity theft or fraud, you will need proof of payment and proof of any business financial activity. So create one file for all your banking and investment records for your personal and business accounts.
You may be wondering how long to keep your bank statements. Proceed with caution. This is helpful if you are claiming losses or deductions for bad debt.
Why keep certain items forever? Some documents do not have expiration dates, such as birth certificates and social security cards. Additionally, these documents can serve as proof of identity. For documents such as car titles or other purchases, keep the relevant documents for as long as you own the items.
Keep important personal documents such as birth certificates, passports, marriage certificates, etc. in a safe place such as a home safe, fireproof container or bank safe.
How Long Should You Keep Tax Records?
Documents such as tax returns, receipts, bank statements or payment stubs can also be kept in a safe, or simply locked away in a file at home. For electronic documents, store them in a password-protected folder on your desktop or in another secure location.
At Mazuma, we help clients save and organize important financial information in our secure online accounting portal. Not only do we complete your bookkeeping and taxes, but we also provide easy access to tax returns and other important business documents.
You might want to throw your old financial records in the trash. However, if any of these files contain sensitive personal information, such as your account numbers or social security numbers, you will want to shred them first. This reduces the risk of identity theft.
Knowing how long your financial records are kept is important because it can help you stay organized. This is important if you are a business owner because you want to have everything easily
How Long Should I Keep Old Tax Records?
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