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How long should you keep those financial records?
We receive tons of financial and accounting related questions here at Bloch, Rothman & Associates, LTD in Denver, Colorado.Â These questions become great material and advice for us to share with you on our website.Â
We recently received this question:Â How long should I obtain/keep financial records and documents?
The answer:Â It all depends on the type of document. There are certain documents you always want to keep for financial purposes. These would be records of assets you own, investment account financial statements, bank statements, and credit card statements if they have a record of any tax-deductible items you have purchased.Â
Once you file your taxes, the IRS has up to 3 years to audit you. However, if the IRS discovers that you have underreported your income by 25% or more, this gives them the authority to audit you up to six years back. Seven years back if you claim a loss for bad debt, and if fraud is suspected, there are no time limits for the IRS. So while it's personal preference, we advise to keep any tax and expense records for seven years or more.
FInancial documents you can safely shred: any credit card statements that are over a month old and contain no deductible items, utility and phone bills over a month old unless you can deduct them on your taxes, reciepts and ATM deposit slips once you have reconciled them, and additionally any paperwork that is just a mirror copy of something that is archived and accessibe online at any time.
We hope this helps you to "de-clutter" your financial life a bit, and please do not hestitate to contact us at Bloch, Rothman & Associates, LTD in Denver, Colorado for expert tax preparation and Denver accounting services: (303) 321.7160.