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Tax Record Retention Guidelines

Posted by Predovich & Company

Predovich & Company's recommended retention times (from the date your tax return is filed or the due date, whichever is later) for these common tax documents:

Copies of tax returns as filed - Keep forever.

Previous IRS audit settlement - Keep forever.

Real estate ownership records - Keep forever.

Contracts and leases - Keep forever.

Divorce papers - Keep for as long as you have alimony or child-dependent deductions, plus three years.

Stock basis records - Keep for six years after sale of stock.

All records relating to income, revenue, or gains (such as W-2s, 1099s, broker statements, bank statements, sales, ledgers, etc.) - Keep for six years.

Records pertaining to asset gain/loss computations (for investment real estate, collectibles, etc.) - Keep for six years after sale of asset.

Expense reports for reimbursed expenses - Keep for six years.

Proof of deductible personal expenses (cancelled checks, receipts for charitable contributions, etc.) - Keep for three years.

Business expense records (vendor invoices, receipts, etc.) - Keep for three years.

Depreciable asset records and cost of goods sold computations - Keep for three years, or keep forever if you use LIFO accounting.

Employment tax records (for businesses) - Keep for four years.

Proof of loss from worthless securities or bad debt deduction - Keep for seven years.

The IRS also warns:  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.

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