Taxes - Knowing Which Papers to Keep/Toss

As end-of-the-year statements start arriving, it's always confusing to know what to keep and how long to keep them. Here's what Mary Kay Foss and John Levy, California CPAs, recommend:

"ATM, Debit and Credit Card receipts - Check against your monthly statements, then, unless needed for a tax write-off, shred after one month.

Monthly credit card and banking statements - Save records of tax-deductible items for seven years; shred the rest when the new statement arrives. Exception: proof of major purchases. Retain for at least four years (most states' statute of limitations for disputing a transaction).

Paid bills - Keep any related to a home office tax deduction for seven years, those from home improvement until you sell. Shred everything else when the next bill arrives.

Pay stubs - Shred when your W-2 arrives (once a year).

Car or real estate paperwork - Hold records from buying any asset for seven years after it's sold.

IRS Documents - Retain annual returns forever. Discard supporting papers like W-2 forms and receipts after seven years." (Source: Family Circle magazine, p. 152, Nov. 1, 2009)


More on taxes:
Taxes - a little at a time
Get Organized Month - Organize Your Receits
National Preparedness Month - Emergency Kit #8 - Emergency Documents