Finance
November 16, 2019
link to facebook link to twitter
More Stories
Roth IRA conversions What are your options? Three key questions to answer before taking Social Security Retirement planning weak spots; they are all too common Taking charge of your financial life Adjusting your portfolio as you age When is Social Security income taxable? Debunking a few retirement myths Retirees, check your withholding Underappreciated options for building retirement savings Social Security gets its big boost No, that is not the I.R.S. calling Is Gen X preparing adequately for retirement Tax scams and schemes Diversification, patience and consistency Signs of elder abuse The high cost of health care TOD or living trust? Coping with an inheritance The different types of IRAs Annuities for retirement income Annuities for retirement income What prospective annuity holders should consider Build your rainy day fund Details people should know about Medicare Five retirement concerns too often overlooked Investing means tolerating some risk Your diversified portfolio vs. S&P 500 Making a charitable gift from your IRA Smart financial moves in your 20s, 30s, 40s and 50s Unrealized loss and gain What they are; why they matter. Making investment decisions Do your investments match your risk tolerance? Helping your parents manage financial tasks Retirement plans for individuals & businesses A retirement fact sheet College funding options Ways to ease college costs Turn your intent into a commitment, set goals as you save and invest Managing money well as a couple Preparing to retire single Tax efficiency in retirement Set goals as you save and invest Could assumptions harm your retirement strategy? A retirement gender gap for women Bad money habits to break Have you budgeted for retirement? Saving your elderly parents from financial fraud Mutual Funds vs. ETFs; similarities and differences. Long-term investing truths: Key lessons for retirement savers Where will your retirement money come from? Retiring in the next 5 years? Catching up on retirement saving Money tips for newlyweds Retirement and adult children The retirement mind game Tax considerations for retirees Smart moves for new parents When you retire without enough ABLE accounts for disabled When a family member dies An executor checklist The retirement we imagine, the retirement we live Steps to catchup if you are behind on your retirement savings? Your financial co-pilot Yes, young growing families can save and invest Why don’t all affluent people become wealthy? Beneficial moves for every age Keep calm, stay on plan

What should you keep?

By: Ken Weise
August 17, 2018

Even with less itemizing, there are still documents you want to retain for years to come. 

Fewer taxpayers are itemizing in the wake of federal tax reforms

You may be one of them and you may be wondering how many receipts, forms and records you need to hold onto for the future. Is it okay to shred more of them? Maybe not. 

The Internal Revenue Service has not changed its viewpoint. 

It still wants you to keep a copy of this year’s 1040 form (and the supporting documents) for at least three years. If you somehow fail to report some income or file a claim for a loss related to worthless securities or bad debt deduction, make that six years or longer. (It also wants you to keep employment tax records for at least four years.)

Insurers or creditors may want you to keep records longer than the I.R.S. recommends – especially if they concern property transactions. For the record, the I.R.S. advises you to keep documents linked to a property acquisition until the year you sell the property, so you can do the math necessary to figure capital gains or losses and depreciation, amortization and depletion deductions.

Can you scan documents for future reference and cut down the clutter? 

Yes. The I.R.S. says that legibly scanned documents are acceptable to its auditors. It wants you to keep digitized versions of paper records for as long as you would keep the hard-copy equivalents. Assuming you back them up, digital records may be more durable than hard copies; after all, ink on receipts frequently fade with time. 

While many itemized deductions are gone, many records are worth keeping. 

Take the records related to investment transactions. It is true that since 2011, U.S. brokerage firms have routinely tracked the cost basis of equity investments purchased by their clients, to help their clients figure capital gains. Some of the biggest investment providers, like Fidelity and Vanguard, have records for brokerage transactions going back to the 1990s. Even so, errors are occasionally made. Why not save your year-end account statement (or digital trading notifications) to be safe? In addition, you will certainly want to keep any records related to Roth IRA conversions (which as of the 2018 tax year can no longer be re-characterized).

The paper trail pertaining to health care should also be retained. In 2018, you can deduct qualified medical expenses that exceed 7.5 percent of your adjusted gross income (the threshold is scheduled to rise to 10 percent in 2019).

Some records really should be kept for decades. Documentation for mortgages, education loans, loans from a retirement plan at work and loans from an insurance policy should be retained even after the loan is paid back. Documentation pertaining to a divorce should probably be kept for the rest of your life, along with paperwork related to life insurance. You should also keep copies of property and casualty insurance policies, receipts of expenses for home repair or upgrades and inventories of valuable and moderately valuable items at your home or business.

The big picture of personal financial recordkeeping has not changed much. It is still wise to keep records pertaining to financial, health care, insurance and real estate matters for at least a few years

 

Ken Weise, an LPL Financial Advisor, provided this article. He can be reached at 707-584-6690. Securities offered through LPL Financial. Member FINRA/SIPC. The opinions of this material are for information purposes only.