Now that the tax season has come and gone, you must be thinking – what a great time it is to throw out all these old statements and receipts! But, how do you know what records should be kept? Just hold on to this year’s stuff and toss the rest?
Well, not so fast.
Sure, some cleaning up of your personal files in your home office is always a good idea, especially in the spring. However, how do you know which pieces of your financial history are to be kept and which are to be tossed?
It’s true that if it were up to the IRS, you would have to hang on to ALL your financial records forever! But, that simply isn’t the reality.
When looking to clear out space from your desk and you are seeking to toss certain pieces of personal paperwork, bear these things in mind;
- Unless a receipt or document was used on a tax return as proof of a deductible expense, you can shred it. This includes ATM and deposit slips, monthly and quarterly bank statements and year-end statements, if received.
- Any income-related documents like invoices, cash receipts, credit card charge slips, etc. should be kept at least three years. Especially 1099s and W2s, along with your actual tax returns.
- Receipts for charitable contributions and mileage logs and any proof of purchase and expenses should be kept at least for three years.
- Paying for your own health insurance now? Making retirement contributions? Keep track of those invoices and receipts, as they are used in your annual tax return as deductions and if your return is ever contested, you will need these supporting documents.
The basic rule of thumb is anything that you used when filing your income tax return (receipts that were used in deductions, the last pay stub of the year or time from your employer, etc.) should be kept with a copy of that corresponding tax return for at least 3 years.
If you have any questions outside of what is listed, or for your own peace of mind, make an appointment with William Wolske, CPA. You can insure you are saving the right pieces and not harboring ones that can be discarded. Contact our offices at 843-706-9644 and schedule a free consultation. We’ll go through your financial situation together and have your peace of mind waiting on the other end.