spring cleaning: paperwork

After B and I finished our taxes (confession: I didn't really do a thing -- he happily did them all from start to finish!), I suggested that we wade through our paper records, consolidate things, get rid of old records that we didn't need, etc.  In the process, I did a bit of research on exactly what we should keep in case we were ::gasp:: audited.

With the help of this lovely article, I learned the following:

  • The statute of limitations for an audit is just three years. 
  • Unless the difference in reported income is  >25% of your gross income, in which case the statute of limitations is six years.
  • For any rule breakers out there, there's no statute of limitations for complete tax fraud; so basically infinity years.

The experts recommend that you hang on to your tax returns and related documents (W2, 1029, deduction receipt, etc.) for the duration, or at least for 6-7 years.  In addition, you should hang on to bank statements for the window of time that the bank allows you to challenge charges.

Here's some technical talk on the kinds of records to keep.
Moral of the story: set yourself free from unnecessary financial records -- shred 'em, baby.

Liberating, huh?

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