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Suggested Record Retention

Suggested Record Retention (note: Suggested)

P= Permanent  O = Optional  Number = years

Bank Statements  7

Bonds Registered, Sold, or Transferred  P

Stock, sold or otherwise  P

Cash Books/Receipts   P

Charge Slips   10

Financial Statements, certified   P

General Ledger   P

Notes, cancelled   10

Payroll Records   10

Stock Ledger   P

Trial Balance Sheets   P

Work Papers, rough   2

Audit Reports, internal  6
Audit Reports, public/government  P

According to the IRS, you should keep your tax records from 3 to 7 years depending on your situation. Additionally, the IRS recommends keeping copies of your W-2 forms until you’re eligible for retirement. Having these documents can help you be prepared in the event of an audit. In fact, many people do not realize that a tax examiner will not have your old returns. Instead, they will ask you to bring your past tax returns to the audit.

If you need a copy of an old return, your H&R Block Tax Professional can help. Or if you did your taxes online with H&R Block At HomeTM, you can access a past return at hrblock.com. You can also request of a copy of a past return from the IRS for a small fee using IRS Form 4506.

Keeping records of large purchases
You might make large purchases of items that you may want to sell later (your home being one of the largest). Keeping records and receipts related to these items can help you identify a gain or a loss when you do sell. Plus, having these records can help you determine an insurance reimbursement amount if you have a claim due to damage or theft. Some examples of the records you want to keep include:

Records detailing improvements to your home.
Receipts regarding the purchase, maintenance, and improvement of rental property. Records of capital assets such as coin and antique collections, jewelry, stocks, bonds, and more.

Other things to consider - Keeping your bank account and loan records can help you verify your taxable income in the event that the IRS believes your lifestyle appears more comfortable than your income would support. Here are some other records and documents to consider keeping:

Insurance policies – to help you determine your reimbursement in case of a loss from a casualty or theft, medical expenses, or certain business losses. Family records such as marriage licenses, birth certificates, etc. – to prove a change in filing status or dependency exemptions.
Health history and medical procedure records – to prove necessary and deductible medical expenses.
Receipts or other records showing purchases – to prove payment for large purchases.

Cleaning out the file cabinet Once you determine that you no longer need receipts or old credit card statements, it’s a good idea to shred the records before you throw them away. With today’s concerns about identity theft, the extra step to destroy the documents can give you peace of mind.

HELPFUL HINTS

Generally, 7 years is the longest that the IRS recommends keeping tax records although, in some cases, 3 years is sufficient. Records showing the purchase of an asset should be kept until you no longer own the asset. You don’t need a fancy recordkeeping system. Labeled folders and a little diligence can keep you organized. It is a good idea to keep records in a fire proof box or safe. You can also keep your records electronically.