If your family is like mine, you’re overwhelmed with records: paper, digital, or a combo. At least once yearly, at tax time while the clutter is out, I promise myself to ditch what we don’t need, but I usually fail to follow through. This year is different. Let’s make an April New Year’s resolution to decide what to keep and what to toss and do it.
KEEP for one year
• Paycheck stubs until we get our W-2 next January to check their accuracy
• Bank statements to verify our 1099s
• Brokerage statements until we get our annual summary (if they show a gain or loss, keep longer)
• Receipts for healthcare bills in case you qualify for a medical deduction
• Utility bills to track usage (seven years if you claim a home office)
For seven years:
• Supporting docs to include W-2s, 1099s, and receipts or cancelled checks that substantiate deductions. The IRS usually has up to three years after you file to audit but they can look back up to six years if it suspects you substantially under reported income or a omitted fraud.
• Tax returns with proof of filing and payment
• IRS forms that you filed when making non-deductible contributions to a traditional IRA or a Roth conversion
• Receipts for capital improvements that you’ve made to your home until seven years after you sell the house
• Retirement and brokerage account annual statements
• Receipts for big-ticket purchases for as long as you own the item in order to support warranty and insurance claims
• ATM receipts, once recorded
• Bank deposit slips once the funds show up in your account
• Credit card receipts after you receive your statement, unless you might need to return an item or need proof of purchase
• Credit card statements that don’t have a tax-related expense on them
Tax Tip: Skip the Post Office! Because of e-filing, fewer locations are available to open late this Tuesday. Search online at irs.gov for “private delivery services” to ensure your returns are sent on time and you won’t be calculating next year’s taxes behind bars.
Ellen Phillips is a retired English teacher who has written two consumer books. Email her at consumer firstname.lastname@example.org.
Ellen Phillips is a retired English teacher who has written two consumer-oriented books. Her Consumer Watch column appears on Saturdays in the Business section of the paper. An expanded version is at www.timesfreepress.com under Local Business.