Please note: our offices have moved to 12301 Whitewater Drive Suite 115, Minnetonka, MN 55343
Client Login

How Long Should You Keep Financial Documents?

Despite new tax laws that will allow millions of taxpayers to skip itemizing deductions next year, there will still be a list of documents to keep and archive for potential future reference (or audit.)

The IRS expects taxpayers to keep copies of tax returns and all supporting documents for THREE years after filing.  Exceptions include the following:

* If you file a claim for loss from worthless securities or bad debt deduction
* Records of income that was NOT reported and is over 25% of reported gross income should be dept for SIX years from due date

* If you don’t file taxes (for any reason), all documents for those years where you didn’t file should be kept indefinitely

Scanned copies of receipts and credit card statements of deductible expenses are acceptable to the IRS, although there are a few exceptions with regards to charitable contributions that are noted in I.R.S. Publication 526.  While bank transaction data can provide helpful records of checks, credit and debit card activity, it is a good idea to check your specific bank’s policies.   Many banks keep records of transactions going back seven years, but if you have switched banks, there may be fees charged to look up old information.  
Records related to investments, particularly taxable brokerage accounts, also need to be accessible.  If you use a brokerage firm, they are required to maintain your records.  If you switch brokerage firms,  the cost basis information for your investments is required to be transferred to your new firm.  It is still a good idea to at least keep either electronic or paper copies of year-end summary statements.  Also, keep in mind that many electronic records for brokerage transactions only go back to the mid-to-late 1990’s. Nondeductible IRA’s are a little more complicated because brokers do not have access to the relevant IRS Form 8606 that the individual taxpayer needs to fill out.  It is recommended that documents related to IRA’s be kept until all related nondeductible contributions have been withdrawn. It is also important to keep any records of regular IRA to Roth IRA conversions.  

Other important documents to retain include:
* HSA receipts and records of healthcare spending for at least THREE years
* All insurance policies including beneficiary designations
* Loan documentation for major transactions such as student loans, mortgages and letters confirming payoff
* Child support, alimony and divorce documentation
* Home improvement receipts, especially for major projects
* Birth certificates, social security cards and military discharge papers
* Estate planning documents such as wills, trust and estate documents, including beneficiary designations.
* Relevant IRS Forms 706, 709 and 8971 should be kept indefinitely.

HW & Associates clients can utilize their NetClient portal to store important documents safely and securely. All submitted tax documents and yearly returns  are stored electronically and are available on the NetClient portal.  Other consumer options for document storage include Microsoft OneDrive, Google Drive, Apple iCloud Drive and Dropbox.

Please call or email your HW & Associates tax professional for if you have any questions related to document retention.



March 1st, 2018

Posted in Featured,Tax

© 2016 Hysjulien and Associates | All Rights Reserved | Site by Blindspot Advisors