Home     About Us    Contact Us     Contribute     Privacy
Investing
Stocks
Bonds
Mutual Funds
Biz
Credit
Career
College
Economics
Tax
More
 
 
Marketplace
Related Categories
Tip of the Day

Tip of the Day Refinance Your Mortgage if You Can Cut At Least One Point

Refinance Your Mortgage if You Can Cut At Least One Point - Refinancing a mortgage only makes good sense if you are going to save more than 1% on the...

read entire tip

Recently Added
Other Great Sites
 

Which Financial Records To Keep

Posted On: 2006-09-12
Length: 11:13

Listen to this podcast

What do you do with all those financial records you keep stuffing into your filing cabinets? Well, computers and the Internet may cut down the volume of paper financial records you have to save, but even in the electronic age, how do you know which financial records to keep, and for how long? Let's find out in this Fidelity Personal Finance podcast.

Bernard Kiley, a certified public accountant and financial advisor in Morristown, New Jersey tells us, "online access to records allows you to eliminate some of the paper accumulation, but it's still your responsibility to make sure that important records are preserved, whether as electronic files, or old-fashioned paper." So what do you pitch, and what MUST you preserve? Well-organized records can save you big headaches, and significant money down the road, says Kiley. They can provide proof of bill payment and help you dispute billing errors, give your heirs a clear picture of your finances, and perhaps most important, provide the documentation you need to avoid tax problems. Kiley says there are an awful lot of people who don't keep good tax records, and that's a mistake. If the IRS ever questions a deduction, or the value of an investment and you don't have the documentation, it can get very expensive. On the other hand, keeping too many records can also make life difficult. Maria Ku, another CPA from Oakland, California warns, "you can't keep everything, because you wouldn't be able to live in your house or find the documents that really are important." So where do you draw the line? Here are some suggestions from accountants and financial planners.

Tax records. Keep them from three to seven records. The IRS has three years from a tax return's due date to challenge the return. That means you should keep all of the records pertaining to wages, dividends or interest income, business profits, capital gains, deductions, and other tax related areas for at least three years. These include documents such as cancelled checks for deductible items, W2 forms, 1099 forms and mortgage interest documents. But the IRS has up to six years to challenge a return if it suspects you underreported your gross income by 25% or more in a given year. As a result, many accountants recommend keeping records for seven years to be safe. For more detailed information about this, see IRS publication Recordkeeping for Individuals, which can be found on the IRS website at irs.gov.

Keeping good tax records will enable you to file an accurate return and receive all of the deductions to which you're entitled. Maria Ku advises, "if you don't pay attention to your records, you could be forced to give up tax deductions and maybe even have to pay penalties and interest." As for copies of your actual tax return, experts advise that you keep them forever so you have evidence that you did in fact prepare and file a return.

Now here's an anti-clutter tip. You don't need to keep pay stubs after you've received your W2 form and verified that it's accurate. Nor do you need to keep receipts or cancelled checks for items or services for which you are not claiming a tax deduction. What about your investment records? Keep these until you sell the security, plus seven years. If you purchase mutual funds or stock shares or some other asset, you need to keep a record...

Discuss It!
Most Popular Articles
Most Popular Definitions
 
Daily Definition

Definition of the Day Joint Venture

Definition: When two or more individuals or corporations cooperate in a business venture and agree to split the profits and management. TeenAnalyst Advice: Joint venture are usually undergone by companies that want to work together but not have to merge.Joint ventures are separate entities created by the companies (or individuals) and...

read entire definition

 
 

 

 

Home     About Us    Contact Us     Contribute     Sitemap

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Copyright © 2009 TeenAnalyst.com