Large amounts of money are contributed to the government each year because poor records organization will cause people to forget or be unable to substantiate legitimate deductions. Even with the level of technology available, personal and business records are kept improperly for most people. Determining what to keep and how long to keep it is a common question.
Following are some pointers on this subject:
- Tax Returns are generally subject to audit for three years from the date of filing. Keep all supportive documentation for at least this long.
- Organizing documents into labeled files will save you time when you need to reference them.
- Computerizing financial records will assist in tax preparation, planning and family budgeting.
- Keep records indefinitely for all assets you still own to establish cost, substantiate an insurance claim or qualify for warranties.
- Permanent records such as birth certificates, deeds and appraisals should be kept in a separate, safe and secure location.
