Discarding tax records too soon can be costly. The length of time you should keep a document depends on the action, expense, or event the document records. Generally, you must keep your records that support an item of income or deductions on a tax return as long as the return can be audited (aka the period of limitations) Period of limitations that applies to income tax returns The general rule
There are exceptions
The following questions should be asked about each record as you decide whether to keep a document or throw it away. Are the records connected to assets? Keep records relating to investments, real estate, business equipment & vehicles used in business and other capital assets until the period of limitations expires for the year in which you dispose of the property in a taxable transaction. 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, 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 in a taxable disposition. What should I do with my records? 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. If
you're not sure what to keep or for how long, you can scan them and save
them on your computer. (Just be sure you have backup in case of
computer problems.) |