Papers, papers and still more papers. When can I destroy these documents?
There are no hard and fast rules in this area. The following offers some general guidance to carefully consider when determining any destruction of documents.
Against the urge to purge, remember that maintaining documents and records is often essential if a tax audit by the IRS, state or local taxing authority occurs. Be aware that it is the burden of the taxpayer to provide sufficient proof and support for any tax position taken on a tax return. Prematurely disposing of relevant documentation and proof supporting a tax deduction or tax position could have a disastrous tax impact.
Tax rules offer some guidance as to minimum document retention periods. It is imperative to keep records such as receipts, canceled checks, and other documents that support an item of income or a deduction, or a credit appearing on a return until the statute of limitations expires for that return. Here are some of the key statute of limitation rules for federal tax returns:
Additionally, it is often imperative to check state and local statute of limitation rules before destroying files and records.
Keep in mind that documents may need to be retained and preserved for legal reasons other than taxation, such as, insurance claims or facilitating the transfer of assets in the case of deceased family member. Documents like death certificates, estate tax closing letters should be kept indefinitely.
For more detailed guidance on how long to keep specific documents and other document retention considerations and safeguards, please read my article Record Retention For Individuals .
For more detailed guidelines for record retention rules and other protective housekeeping measures for businesses see Record Retention Guidance For Business: A Conservative and Basic Approach.
A discussion with your tax attorney and tax accountant may be a prudent and conservative course of action before destroying any documents or files.
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