Important Documents: What to Keep and When to Throw Out
Paycheck Stubs (You can get rid of once you have compared to your W2 & annual social security statement) Utility Bills (You can throw out after one year, unless you're using these as a deduction like a home office --then you need to keep them for 3 years after you've filed that tax return). Jul 15, · Many banks and credit card issuers offer electronic statements now, so you may not need to keep paper copies on hand, which will cut down on excess clutter. If .
As a general rule, if a document that is not named on the above list looks important, it is better to save it than throw it away. If you are unsure about whether you should keep a particular document, you should send it to your estate administration attorney who can review it and advise you on how to proceed. Generally, it is a good idea to shred documents that have any personal or financial information on them to lessen the risk of identity theft.
If you do not have a shredder or the volume of papers is such that it would be impractical to shred them at home, you can hire a document management company to pick up the papers and securely shred what is the meaning of hibernation at an offsite facility.
The cost of hiring a document management company is generally a reimbursable expense of the estate. What documentation should be kept? As estate administration attorneys, we recommend that the following documents be kept: Original birth and death certificate both for the deceased person and any predeceased spouse ; Original marriage certificate, prenuptial agreement and decree of divorce;Original stock, bond and other asset ownership certificates; Income tax returns from the past three years and supporting documents e.
What to do if you are unsure if a document should be kept? How long should these documents be kept? What should be done with the remaining documentation? Tags: Income Tax, Personal. Related Content. Trusts And Estates.
Documents to keep for 12 months
Documents in this category include: Tax records and receipts (keep for seven years) Pay stubs and bank statements (keep for a year) Home purchase, sale, or improvement documents (keep . May 18, · Although they're not necessarily financial documents, you should retain Social Security cards, ID cards, passports, shot records, birth and death certificates, marriage licenses, business licenses, Author: Dana George. Mar 11, · The next set of crucial documents should be digitized, or their electronic versions stored: Tax returns and supporting documents (keep for at least three years, but ideally up to seven) Pay stubs (keep for at least six months, but ideally up to one year) Social security statements (keep current copies).
The length of time you should keep a document depends on the action, expense, or event which the document records. Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out.
The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax. The information below reflects the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date. Note: Keep copies of your filed tax returns.
They help in preparing future tax returns and making computations if you file an amended return. The following questions should be applied to each record as you decide whether to keep a document or throw it away.
Generally, keep records relating to property until the period of limitations expires for the year in which you dispose of the property. You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property. If you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid.
You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property.
When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes.
For example, your insurance company or creditors may require you to keep them longer than the IRS does. More In File. Period of Limitations that apply to income tax returns Keep records for 3 years if situations 4 , 5 , and 6 below do not apply to you. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction. Keep records indefinitely if you do not file a return.
Keep records indefinitely if you file a fraudulent return. Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later. Are the records connected to property?
What should I do with my records for nontax purposes? About Publication , Business Expenses. About Publication , Farmer's Tax Guide. Page Last Reviewed or Updated: Sep Share Facebook Twitter Linkedin Print.
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