I was asked this very question last week by someone who is considering working with me. I gave him the same answer I’ve given everyone: “It depends on many things. There are of course the answers you can find at irs.gov, but you’ll ultimately have to make your own rules and stick to them.”A quick Google search on this question currently results in 33,000 hits. The answers to this question are as varied as the people asking it. This link at irs.gov starts to answer the most basic questions about tax documents, but even still, the answers are a bit nebulous. I’ve found though that many people are quick to make exceptions to any rule, keeping much more than any reliable source would suggest.
Business owners need to keep certain documents and receipts for much longer than W2’d employees. Homeowners generally like to keep certain maintenance records and utility bills longer than renters. This changes too if your business is run out of your home or if you rent space in your home. People who simply sleep better at night knowing that they can locate their taxable income from 1979 need a different set of rules (if they want to get some sleep!) It gets complicated, and exceptions usually are in order.
As an organizer, I pick my battles. I also have to help people create their own rules that they can live with. Though the IRS typically has three years to audit a return, a more common and conservative approach is to keep returns for at least seven years. Last week I worked with a client who felt better about keeping tax returns forever and supporting tax documents for seven years. I thought that was fair enough, considering her personal rule allowed us to fill a trash bag of shredding.
By all means, consult your accountant for specific answers. If you are still uneasy about tossing some documents that, technically, you don’t need, then make a set of personal rules around how long to keep certain documents. For example, if you know for certain that your bank keeps PDFs of your statements, but you just can’t bear to part with them, then keep them organized, attainable, and please trash everything else that comes up against your expiration dates.
Do you have any rules that are your own, as opposed to something you read? How long do you keep certain documents? Do you have additional resources online you turn to for deciding how long to keep records? In the past, have you kept records far longer than necessary because you were putting off making a decision on how long to keep them? Please share in the comments below!