*Pensions: Make sure you keep all your documentation, otherwise you could end up missing out on hard-earned money. Don't forget to tell your pension providers when your contact details change! *Medical records: A medical exemption certificate lasts for five years or until your 60th birthday.
When it comes to tax-related paperwork like payslips, P45s and so on, HM Revenue and Customs (HMRC) suggests keeping them for at least 22 months from the end of the tax year they relate to. So, as the tax year finishes on April 5, you'll want to keep your relevant paperwork until at least January 31 two years later.
How long should you keep documents?
- Store permanently: tax returns, major financial records.
- Store 3–7 years: supporting tax documentation.
- Store 1 year: regular statements, pay stubs.
- Keep for 1 month: utility bills, deposits and withdrawal records.
- Safeguard your information.
- Guard your financial accounts.
The federal government and some state governments granted pensions or bounty land to officers, disabled veterans, needy veterans, widows or orphans of veterans, and veterans who served a certain length of time. Pension records usually contain more genealogical information than service records.
You can demand that the financial companies you have used send you copies of old documents for up to six years. However, HMRC states that individuals should keep tax-related documents for 22 months after the end of the tax year to which they relate.
You have to keep your records for 22 months from the end of the tax year to which they relate.
To be on the safe side, McBride says to keep all tax records for at least seven years. Keep forever. Records such as birth and death certificates, marriage licenses, divorce decrees, Social Security cards, and military discharge papers should be kept indefinitely.
Because of this, you should keep your loved one's tax documents for at least three years. The rule of thumb is to save them for a maximum of seven years.
In general, 401k plan records must be kept for a period of not less than six years after the filing date of the IRS Form 5500 created from those records. However, records necessary to a participant's claim for plan benefits must be kept longer.
A common guideline espoused by many advisors is to retain most employee benefits records for at least seven (7) years.
Chart: What records to keep, how long to keep them
| Document | How long to keep it |
|---|
| Credit card statements | One month |
| Pay stubs | One year |
| Bank statements | Keep monthly statements for one year. Keep annual statements related to your taxes for at least seven years. |
| Utility and phone bills | One month |
NOTE: A payee must save records for at least two years plus the current year and make them available to SSA upon request.
Medical BillsHow long to keep: One to three years. Keep receipts for medical expenses for one year, as your insurance company may request proof of a doctor visit or other verification of medical claims.
Home Sale Records
| HOME SALE RECORDS | |
|---|
| Document | How Long to Keep It |
| Home sale closing documents, including closing statement | As long as you own the property + 3 years |
| Deed to the house | As long as you own the property |
| Builder's warranty or service contract for new home | Until the warranty period ends |
As a general rule, there is a ten year statute of limitations on IRS collections. This means that the IRS can attempt to collect your unpaid taxes for up to ten years from the date they were assessed. Subject to some important exceptions, once the ten years are up, the IRS has to stop its collection efforts.
The “80-120 rule,” as it is commonly known, states that your participant count can rise as high as 120 before an audit is required. This rule can help small- and medium-sized organizations avoid the plan audit requirement while focusing on growing the business.
If the IRS has found you "guilty" during a tax audit, this means that you owe additional funds on top of what has already been paid as part of your previous tax return. At this point, you have the option to appeal the conclusion if you so choose.
An audit occurs when the Internal Revenue Service selects your income tax return for review. Since most audits occur after the IRS issues refunds, you will probably still receive your refund, even if the IRS selects your return for an audit.
If you do not have receipts, the auditor may be willing to accept other documentation, such as a bill from the expense or a canceled check. In some cases, the auditor will actually come to your house and review your records. In other cases, you must go to the local IRS office for the audit.
You can indeed be audited by the IRS, even if you've already received a tax refund. If you are chosen for an audit, consider whether you want to get assistance from a tax professional to navigate the process.
Why the IRS audits people
The IRS conducts tax audits to minimize the “tax gap,†or the difference between what the IRS is owed and what the IRS actually receives. Sometimes an IRS audit is random, but the IRS often selects taxpayers based on suspicious activity.An IRS audit letter will come to you by certified mail. When you open it up, it will identify your name, taxpayer ID, form number, employee ID number, and contact information. Your letter will also reveal the primary focus of the audit and what documentation you need to provide to resolve it.
Audit NotificationIf your tax return is selected for an audit, you will be notified by the IRS by mail. The IRS does not place phone calls or send e-mails to notify the taxpayer of an audit review. The meeting may be held at your home, place of business or in a local IRS office.
