So you’ve filed your taxes, but there are still a couple of steps to complete before you are officially finished with tax season. Both of which have to do with record retention.

First, sort your documents into four categories.

  1. Keep less than one year –This file should consist of credit-card, ATM, and bank-deposit receipts. All of which should be kept until you are able to reconcile them with your monthly statements. Also, insurance policies and investment statements should be kept until the new ones arrive.
  2. Keep for one year or more – Loan documents should be kept until the loan is paid off, which often takes more than one year. Hold onto the titles for any vehicles that you own until you sell them. Keep investment purchase confirmations until you sell your investments so that you can establish your cost basis and holding period. If those two items are on your annual statements, then you can maintain those instead.
  3. Keep for seven years – if you have unreported income of more than 25 percent of the gross income shown on your return, then the government is allowed six years from the time you file to collect the tax or start legal proceedings. Therefore, the recommended time to keep tax records is seven years, just in case.
  4. Keep forever – This category consists of essential records such as; social security cards, birth and death certificates, marriage licenses, divorce decrees, and military discharge papers. Additionally, estate-planning documents, life-insurance policies, defined-benefit plan documents, and an inventory of your bank safe-deposit box should be kept indefinitely.

Next, securely store your files.

  • Keep papers that cannot be easily replaced in a safe-deposit box. For example, social security cards, passports, vehicle titles, original birth and death certificates, loan documents, life-insurance documents, and military discharge papers.
  • Keep a password-protected electronic file or fireproof safe for the following items: Pay stubs, tax documents, estate-planning documents, pension information, bank and investment statements, and insurance policies.

After these steps are complete, you’ll never have to worry about filing taxes again…that is, until next year of course!

Contact Us

If you have any questions regarding your tax documents, or general questions about filing your taxes, Barnes Dennig wants to help. For additional information, please call us at (513) 241-8313 or contact us online here. We look forward to speaking with you soon!