Spring Cleaning for Your Tax Records: What You Need To Keep!
An important part of your personal financial planning is preparing for tax season as filing your taxes with errors can land you in hot water with the IRS. This is why people head to a tax accountant, so they can be assured everything will go smoothly with their taxes.
Once you’ve filed your taxes for the year, you’ll have a pile of documents that you’ll need to sort through in order to determine which to keep and which can be disposed of. Let Abigail Y. Murray, CPA, PLLC help you determine what you must hold onto and what can go in the trash.
What Tax Documents Do You Need to Keep?
There are a few documents you will need to keep indefinitely, including but not limited to: any identification documents, wills, legal filings, power of attorney records, records of insurance, and military service documents.
You should also keep receipts for major purchases and any warranties for as long as you have them.
Documents Kept for a Set Amount of Time
Most documents only need to be kept for a few years. You can toss these out once they have been made obsolete. This can include receipts for items purchased that you no longer own or warranty documents that have already expired.
Documents Kept for Multiple Years
Certain documents, like your tax returns, need to be kept for seven (7) years. While the statute of limitations for an audit is generally 3 years, there are circumstances where the IRS can pursue you up until about 6 years out. Keeping your tax returns can prove to be vital to legally protect yourself.
You should also be sure to keep any forms related to your taxes like W-2s or 1099s. These forms can help prove your income if there is ever any doubt. You should also keep any proof of investments or assets for as long as you own them.
Documents Kept for a Year
You should keep the receipts for any large purchases for a year. You should also keep any forms that can verify your income. Additionally, you should also keep paid medical bills just in case you need them down the road.
Papers That Aren’t Kept Long
Unless you will need a document for proof, virtually most documents can be thrown away once they have served their purpose. For instance, once billing statements have been paid, it’s typically fine to dispose of them.
You may also be able to receive electronic statements so you don’t need to clutter up your home or business.
Get Tax Assistance from Abigail Y. Murray, CPA, PLLC
A reliable accountant can save you and your business from financial troubles. We offer numerous services consisting of everything from filing your taxes to virtual Chief Financial Officer services.
Don’t wait until the IRS comes knocking on your door, let the experts handle it for you. We can make sure everything is in order and ready to pass the sharp eyes of the government.