Easier said than done, we are buried in mounds of paper from years past. Shredding documents takes effort, and time, and it is usually easier to box papers up, and stash them somewhere. Still, there is compelling reasons to act, and clean up.
According to Catherine M. Williams, vice president for financial literacy at the credit counseling firm Money Management International, there are two main reasons to keep financial records. “It’s either for backup to a tax issue or for proof that you did something like make a payment,” Ms. Williams said.
The Internal Revenue Service requires that individuals be able to produce records proving any income, deductions or credit claimed for at least three years from the date of a return, the statute of limitations for how long the I.R.S. has to assess additional tax if all income was reported correctly. In addition, the I.R.S. requires that individuals be able to produce such records for six years if they fail to report income that is more than 25 percent of their gross income. There is no statute of limitation for failure to file or tax fraud.
Therefore, experts generally recommend keeping anything that verifies the information in your tax return for at least six to seven years. “My recommendation would be never throw away copies of your tax returns and checks made out to the government — anything else, I would say keep for at least six years,” said Jude Coard, a tax partner at accounting firm Berdon L.L.P.
[Click to continue reading Keep Your Financial Records No Longer Than You Must – NYTimes.com]
Maybe we need an intern, one that can be trusted to make judgement calls about sensitive financial information.