To Shred or Not To Shred?
By Sarah Schmidt, Esq.
With that in mind, how long should you keep those important documents?
Typically, you should keep your federal income tax returns and supporting documentation for at least seven years. The Internal Revenue Service provides that “[t]he length of time you should keep a document depends on the action, expense, or event the document records. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out. The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or that the IRS can assess additional tax.” 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.
However, the IRS has assigned other scenarios (such as failure to report income or failure to claim a credit or refund) varying periods of limitation, ranging from two to seven years. To err on the side of caution, best practice is to keep your records for the longest period of limitation recommended by the IRS. Therefore, consider keeping your federal income tax returns and supporting records for at least seven years from either the due date of the return or the date the return was filed, whichever is later.
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, seven years.
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. Because a court can find that an express clause in your contract is unreasonable, you should keep your records for the length of the statute of limitations in your state. Once the period of time specified in the statute of limitations has passed, you (and the other party) are barred from filing a claim.
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
According to the FDIC Consumer News keep your bank and credit card statements for a period of one year; unless they have any tax significance (in which case, keep them for seven years).
Keep investment account statements for the life of your investment, plus seven years for tax purposes. This should provide you with basic guidelines from various sources to help you trim your file cabinet. However, opinions vary on the exact dates for retaining records and when in doubt, always err on the side of caution. Moreover, there are many important documents not mentioned above that should be kept indefinitely. 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 – Dogs Respond to Crying
Hook Law Center: Kit Kat, what can you tell us about dogs responding to their owners when they cry?
Kit Kat: Well, this is very interesting and just goes to show how smart and intuitive dogs and other animals are. A new study published July 24, 2018 in the journal Learning & Behavior suggests that dogs picked up on crying cues by their owners. In the study, dog owners were behind doors with windows, with the door loosely ajar. When their owners made distressed sounds like “help” in addition to a crying sound, the dogs responded significantly more quickly than when their owners sang “Twinkle Twinkle Little Star.” When the distressed sounds were made, the dogs responded on average within 23.43 seconds. When the humming of a children’s song was heard, they responded in 95.89 seconds on average. “It’s really cool for us to know that dogs are so sensitive to human emotional states,” said Emily Sanford, a graduate student in psychological and brain sciences at Johns Hopkins University, who was a co-author of the study. There weren’t any measurable differences among different breeds or dogs of different ages in regard to how they responded.
The study was small with only 34 dogs participating. Still, the scientists believe it is a useful first step in measuring dogs’ emotional states. They also evaluated the dogs’ heart rate and behavior during the experiment. In summary, they found that dogs who were less stressed, responded to their owners’ sign of distress more quickly than those dogs who tended to be stressed themselves. Sanford and her other researchers concluded from this, “ The idea is that if you can perceive someone else being in distress but it doesn’t overwhelmingly stress you personally, then you’re more likely to be able to provide help.”
Isn’t it wonderful to know our canine friends are so attuned to how their owners are doing. Anecdotal reports have shown the caring and concern of dogs, but this study and others prove it really is true. (https://www.cnn.com/2018/07/24/health/dogs-human-crying-empathy-study/index.html)
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