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June 13, 2022 | Posted in:

Your Tax Records: Toss This, Not That

Before you close the file on this year’s tax return, there is still accurate record-keeping to prepare in case of an audit. Here are some tips for organizing everything.

Save indefinitely

• Your tax return
• Records related to a home purchase or sale
• Stock transactions
• Business/rental records

Retain for three years

• Canceled checks
• Invoices
• Other proof of payment for claimed deductions
• Bank and credit card statements
• Mileage logs
• Receipts with time, place, and purpose noted

Know other requirements

• States often require 6 months to 1 year longer than the Federal government.
• Social Security records should match your pay stubs; proofing is a good idea.
• Insurance, banking, and estate management may require other records.
• If your return understates your tax obligation by more than 25%, the government will require 6 years of records. If fraud is involved, the record retention period is indefinite.

Keep a good system

• Rotate your records at the end of the tax year. Decide how many years must be retained, count back from your current filing year and shred older documents.
• Create new files for this tax year to save receipts.
• Consider scanning records to keep digital copies.
• If you are unsure whether to retain or shred, retain it.

 

For a more in-depth cheat sheet on personal and business record retention, download our complimentary Record Retention Guide PDF.

 

This article is from Alloy Silverstein’s Summer 2022 Client Alert newsletter. Download the full issue or subscriber to future enewsletters at our Publications page.

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