Tuesday, August 2, 2011

HOW LONG SHOULD YOU RETAIN YOUR TAX INFO?

Conventional wisdom says to hold on to tax documents for three years after filing a return, said Liz Weston in the Los Angeles Times. But the conventional wisdom isn’t always so wise. Many assisted-living facilities, for example, want to see five years’ worth of financial statements from prospective residents. Medicaid also looks back five years into would-be recipients’ financial pasts to ensure that people aren’t “artificially impoverishing themselves by transferring money or assets” before they apply for coverage. And the IRS can demand up to six years of records from taxpayers suspected of underreporting income. If you’ve already shredded your documents, most banks, brokers, and credit card companies will provide copies—for a fee.