The IRS proposes to keep the W-2, 1099 and related documents for three to seven years. However, depending on your individual tax situation, it may be advisable to keep them longer. Know what documents you really need and how long you need to keep them. For your most important documents, experts recommend keeping multiple copies. This can mean keeping one copy in your cloud storage and another on a hard drive. It could also mean keeping a copy in your electronic tray and a printed copy in a fireproof safe. Dear Lifehacker, I am overwhelmed by documents! Old tax documents, receipts, invoices, contracts,. A number of documents need to be backed up forever. These are the most important ones you will need at any time in the future for various reasons.
Making sure they are kept in a safe place and that a copy is safe will save you a lot of time when they are needed. It`s rare that someone wants to see a utility bill or credit card statement more than a year ago. However, you may choose to keep the following NON-TAX ITEMS for internal use for up to 3 years: Legal obligations related to the landlord-tenant relationship do not automatically end at the end of the lease. For homeowners who earn income from rental properties, the IRS can challenge tax returns from the past six years — especially if they suspect fraud. Keeping a complete written record in your condition for at least the duration of the statute of limitations is your first line of defense when you are examined or brought to justice. When it`s time to get rid of old leases, shred them. You don`t want personal financial information about you or your tenants to be accessible to unscrupulous people. Investment and real estate records must be kept for at least seven years after the date you sell them.
This includes: When talking about your monthly mortgage statement, it`s only necessary to keep it until the last statement reaches your mailbox or inbox. When it arrives, make sure your mortgage balance correctly reflects your last payment. Once you have determined that this is the case, you can discard the old instruction and simply keep the new one. Rental records are kept for two reasons: to comply with tax law and to allow the landlord to file a defense in case a former tenant takes legal action for breach of the lease. After a certain amount of time set by state law, a former tenant will no longer be able to sue you in court and, with a few exceptions, the IRS will no longer review old tax returns. In the meantime, your tax returns themselves are another story. The IRS says that if you don`t file a tax return or if a fraudulent tax return was filed on your behalf, your best bet is to keep all tax returns forever. The issue of prolonged retention of mortgage statements, tax records and documents related to your vehicle are the ones that come up most often.
Laura Adams holds an MBA from the University of Florida. She is an award-winning author, speaker and personal finance advocate who is a frequent and reliable source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is his latest title. Laura`s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was a new version of Amazon #1. Do you have a question about money? Call the Money Girl helpline at 302-364-0308. Your question could be shown on the show. How long do you need to keep your taxes, receipts, bank statements and other important documents? Each type of document is different, so keep all your documents long enough before you start the shredder, even if you think you`re done with it. Keep debit and credit card receipts in a “receipt file” until you match them to your monthly bank statement or online account file. Then you can shred them. Your receipts for cash purchases should be kept until you enter them in your accounting or budget records. Yes, it is important that you also track your cash transactions! However, if you are making a major purchase for something like electronics or jewelry, always submit the receipt in case you need to make a warranty claim or prove the value of the item to your insurance company. And, of course, keep any receipts you might need for tax purposes.
First of all, here is a list of very important documents that you should keep forever, because they are impossible or very difficult to replace. Keep the following records in a safe or fireproof locker: In addition, many people recommend following the 3-2-1 rule when keeping records and documents. “I keep valuables in a large fireproof safe. It`s well hidden and far too difficult for anyone to just go out. Everything else, like paperwork, you can easily recycle. Make sure you have a flexible filing system in place so you can keep these documents under control. It`s also a good idea to get used to going through your saved documents regularly. Try to do this when you`re paying bills, filing your taxes, or dealing with a similar recurring task so you don`t forget and your documents get out of control. If the documents are still “active” – you must keep them for reference – place them in your home classification system by subject.
Do not crush them until they are no longer in use. Updated legal documents such as wills, estate plans, living trusts and year-end powers of attorney from taxable dealers should be retained seven years after the sale of a security such as an exchange or exchange-traded fund, even if they are available online. This is because there is always a possibility that your brokerage company will go bankrupt. In addition, brokerage firms have different policies on how long they provide electronic records and how much they charge to retrieve older documents. You need your investment statements to document your capital gain or loss on an investment. Now that you know what you really need to keep, you can scan these documents and store them on an encrypted flash drive, external hard drive, or remote backup service like Carbonite instead of submitting the hard copy. To be sure, use a combination of these storage options to make sure you never lose your data. The IRS considers copies of digital documents to be just as good as originals.
However, any documents with an original signature or notary seal, such as a will or contract, should never be discarded, even if you scan them for a backup copy. Set up common folders for different types of documents (e.B, household, taxes, car, birth certificates, etc.) You don`t need to be too specific when storing documents, as electronic filing systems are searchable. But what about your financial records? For taxes, you have up to three years to file an amended tax return, and the IRS has up to six years to review you. However, IRS Publication 552 states that you “keep your records for as long as necessary to administer a provision of the Internal Revenue Code.” I understand that this means that it means . eternal. The IRS also says you should keep your W-2 bank statements until you start receiving Social Security benefits. .