“To Keep or Not To Keep”
Unsure how long to keep a certain document? You’re not alone when it comes to record retention. From employment applications to bank statements, most people find themselves somewhere between obsessively hoarding or frantically tossing documents as a means of de-cluttering their life. However frustrating, it’s important to be wise when organizing records as there are certain rules to abide by in case certain documents are ever needed.
Did you know a federal law known as the “three-year law” requires you to retain copies of your tax returns and supporting documents for three years? However, if the IRS believes that you have under-reported your income (by 25 percent or more) or believes there may be an indication of fraud, it may reach as far back as six years while performing an audit. This is just one reason why it’s imperative to know what is worthy of retention and for how long. The following record retention guidelines will help you know just what to do.