With Tax Time Fast Approaching
How Long Should You Keep Your Records?
With tax time fast approaching, what a better time to clean out those file cabinets. But how long should you keep your documents? Below are some recommendations and general guidelines.
Typically, you should keep your federal income tax returns and supporting documentation for at least seven years. Review this link to see what the Internal Revenue Service recommends. The IRS has several different periods of limitation. Most significantly, if you have ever failed to file a tax return or have ever filed a fraudulent return, you should keep records indefinitely. The best practice is to keep your records for the longest period of limitation recommended by the IRS. But also be sure to check with individual insurance companies or creditors where applicable.You should keep your Virginia tax returns and supporting documentation for the same length of time, at least seven years. The Virginia Department of Taxation recommends keeping your records for three years from either the due date of the return or the date the return was filed (whichever is later) unless the Internal Revenue Service suggests otherwise.
Therefore, keep all of your tax records for the same length of time at least seven years if not longer.
How long you should keep a contract and supporting documentation varies. At a minimum, you should keep a contract for the length of time that you (or the other party) could file a lawsuit. This length of time is determined by the terms of your contract and the laws in your state. While the terms of your contract may control this length of time, each state law provides a statute of limitations as well. A statute of limitations is a law that bars a party from filing a claim after a specified period of time. In Virginia, the statute of limitations for a contract also depends on the type of contract. In general, the statute of limitations for a written contract is five years and for an oral contract, it is three years. See Va. Code § 8.01-246 for exceptions.
- Credit Card and Bank Statements
Review this link for a recommendation from the FDIC as to how long to keep credit card statements and bank statements.
- Investment Accounts
Consider keeping investment account statements for the life of your investment, plus seven years for tax purposes.
- Documents From A Decedent’s Estate
A great number of our clients serve as a personal representative (either an executor or administrator) of a loved one’s estate. And serving in that capacity requires a great deal of record keeping. How long should you keep those records? The answer to that question depends on the type of records. For example, if they are tax records, see recommendation from the IRS.In addition to considering what type of document it is, a personal representative of an estate should also keep all accounting records, supporting documentation, and related correspondence for at least ten years (or longer if the specific document so requires). While a breach of fiduciary duty claim is typically subject to a much short statute of limitations, a final accounting may be subject to a suit to surcharge and falsify for up to ten years by some individuals. See Va. Code § 8.01-245.
This should provide you with basic guidelines from various sources to help you trim your file cabinets. Opinions, however, vary as to the exact dates for retaining records and the specific situation of every case. There are also many important documents that should be kept indefinitely. This article is not intended to substitute legal advice and when in doubt, always contact an attorney. If you have any questions or concerns, please feel free to call the Hook Law Center, P.C. and we will be happy to assist you.
Ask Kit Kat – Piper, Collie Extraordinaire
Hook Law Center: Kit Kat, what can you tell us about Piper, the border collie, who worked at the airport in Traverse City, Michigan, clearing the airfield of birds, geese, foxes, and groundhogs?
Kit Kat: Well, this is such a heartfelt story. Piper was a devoted helper and pet to the Traverse City airport operations manager, Brian Edwards. His short life of 9 years was a very productive one. Besides being a devoted pet, he worked the last 3 years of his life as the airport’s K-9 wildlife control officer. He was extremely good at it, too. During his tenure, he had chased away approximately 8,367 birds from the runways, as well as an assortment of other critters who posed threats to air safety.
He became somewhat of an internet star when pictures of him in eye goggles and his work vest hit social media. He was a very good-looking dog with black and white markings. His telegenic face captured in a photo won him a US Coast Guard-sponsored contest. Edwards adopted him at age 2, and they became inseparable. However, he was so much more than his looks. He usually worked 40 hours per week. Edwards had to train him to do the job, and he learned quickly. He first started by doing what he called ‘passive training,’ –just letting him hang out at the airport getting used to the noise. Then, he acclimated him to wearing goggles—all necessary skills for airport work.
Edwards did not publicize Piper’s illness (prostate cancer) which was diagnosed in January 2016. Piper really didn’t suffer from the condition until December 2017. Then he was having extreme difficulty urinating. He had his bladder drained a few times, but on January 3, the cancer overtook him. Edwards draped Piper’s body with a US flag from the Coast Guard air station at the airport and posted that picture to Piper’s Instagram account with the caption—‘Airport K-9 Piper is off-duty.’ Piper will indeed be missed by many. (Karin Bruillard, “RIP Piper, a heroic dog who kept airport runways safe,” The Washington Post, (Animalia section), January 5, 2018)
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