As a general rule, keep in mind the following:

Taxes; Returns; Cancelled checks/receipts (alimony, charitable contributions, mortgage interest and retirement plan contributions); Records for tax deductions taken: Seven Years

• The IRS has three years from your filing date to audit your return if it suspects good-faith errors.
• The three-year deadline also applies if you discover a mistake in your return and decide to file an amended return to claim a refund.
• The IRS has six years to challenge your return if it thinks you under reported your gross income by 25% or more.
• There is no time limit if you failed to file your return or filed a fraudulent return.

IRA contribution records: Permanently

If you made a nondeductible contribution to an IRA, keep the record indefinitely to prove that you already paid tax on this money when the time comes to withdraw.

Retirement/savings plan statements: From one year to permanently

• Keep the quarterly statements form your 401(k) or other plans until you receive the annual summary; if everything matches up, then shred the quarterlies.
• Keep the annual summaries until you retire or close the account.

Bank Records: From one year to permanently

• Go through your checks each year and keep those related to your taxes, business expenses, home improvements and mortgage payments.
• Shred those that have no long-term importance.

Brokerage Statements: Until you sell the securities

You need the purchase or sales slips from your brokerage or mutual fund to prove whether you have capital gains or losses at tax time.

Bills: From one year to permanently

• Go through your bills once a year.
• In most cases, when the canceled check from a paid bill has been returned, you can shred the bill.
• However, bills for big purchases – such as jewelry, rugs, appliances, antiques, cars, collectibles, furniture, computers, etc. – should be kept in an insurance file for proof of their value in the event of loss or damage.

Credit card receipts and statements: From 45 days to seven years

• Keep your original receipts until you get your monthly statements; shred the receipts if the two match up.
• Keep the statements for seven years if tax-related expenses are documents.

Paycheck stubs: One year

• When you received your annual W-2 form for your employer, make sure the information on your stubs matches.
• If it does, shred the stubs.
• If it doesn’t, demanded a correct form, known as a W-2c.

House/condominium records: From six years to permanently

• Keep all records documenting the purchase price and the cost of all permanent improvements – such as remodeling, additions and installations.
• Keep records of expenses incurred in selling and buying the property, such as legal fees and your real estate agent’s commission, for six years after you sell your home.
• Holding on to these records is important because any improvements you make on your house, as well as expenses in selling it, are added to the original purchase price or cost basis. This adds up to a great profit (also known as capital gains) when you sell your house. Therefore, you lower your capital gains tax.

Need a tax advisor recommendation for helping you with your tax matters? Give me a call. I am your go-to girl for who-to-go-to!

Meanwhile, if you, or someone you know is thinking of moving, please give me a call. I help buyers and sellers get to where they want to go, on time and with peace of mind.