Spring cleaning your financial records: keep or throw away?
Tax day is over. Now can you throw away all those scraps of paper, right?
Maybe. Here’s the low-down on paperwork from the Privacy-Rights Clearinghouse:
— Throw away old pay stubs once you checked the information against your W-2.
— Keep any documentation related to an entry on your tax return this year, or some future tax year. If you bought stock, keep the paperwork so you can figure your cost basis whenever you sell the shares.
— Retain documents as long as the IRS is likely to audit a return. For most, that’s three years. But if you underreport your income by more than 25 percent, an IRS auditor can come knocking as much as six years later. Blatantly lie and file a fraudulent return and the IRS auditor has no time limit.
— Each state has its own audit deadlines. So, check with your home state.
One of the handier tips: If you lost your birth certificate, you can find out where to replace them at a government Web site.
Also, if you are throwing away papers, make sure you shred with a cross-cut or confetti shredder, the privacy group says.
(Photo courtesy of stockxchng.com)
