Which documents are important to retain?
The IRS requires individuals living in the United States to retain certain documents, for audit purposes.
Are there any other documents that are useful to retain, in addition to those already required by the IRS?
As an example: Say I've faithfully paid my electric bill for the past 30 years. Then, suppose the electric company claims I only paid out of my bill for the month of July last year. If I had retained every electric bill, I could use it to prove that the bill for July had in fact been , and that the electric company is in error in charging me .
However, the above example seems a bit far-fetched. Are there circumstances where retaining certain bills or statements will help me in a reasonably feasible circumstance?
(2)2 Comments
Sorted by latest first Latest Oldest Best
Check the statute of limitations in your State, but generally running bills include starting balance. So in case of a utility bill - it will show a non-zero balance carrying forward if you didn't pay your previous bill. They will generally not come out of the blue 5 years down the road claiming you didn't pay a bill - they'll nag you about it every bill they send you.
Try to keep all the bank statements (electronically, nowadays you can just download PDF from your bank), and through that you can track most of your major payments. You can add credit card statements to the mix. Utility bill? If they suddenly discover a mistake in their favor 5 years later - they'll have the burden to prove it, not you.
@littleadv hit the high points. Two notable exceptions come to mind -
Stock transactions. Brokers are now required to keep your cost basis when you purchase a stock or fund. Previous to this rule, it was wise to keep the statements showing stock purchases to document cost basis.
Real Estate expenses/improvements. For rentals, all documents until 7 years after the sale of the property. For your home, anything documenting an addition or improvement that would be added to your basis so you avoid a tax on the sale. (Yes, there's a 0K/person exclusion, but you might have a higher gain, or the law might change. Better safe than sorry)
Terms of Use Privacy policy Contact About Cancellation policy © freshhoot.com2025 All Rights reserved.