How Long Should I Keep Paper Receipts?
The length of time it is advisable to hold on to paper receipts depends on what they are for and how they will be used. Some need to be kept forever, others for seven years, and others just long enough to record the expense. It can help to keep envelopes for different kinds of receipts to keep track of them effectively and make sure that they do not spiral out of control in the filing system.
If a receipt will be used to make a claim on taxes, it should be kept until the statute of limitations on tax-related topics runs out. In the United States, taxpayers have three years to make a good faith correction to their taxes, but the Internal Revenue Service has up to six years to challenge prior year filings. It is advisable to keep paper receipts for seven years in these cases, so they will be available if necessary. This includes all evidence of income, purchases, expenses, and investments.
Paper receipts for contributions to retirement accounts should be kept forever to provide proof of deposits. Likewise, it can be advisable to keep paper receipts for payments on loans forever, or until the loan is fully paid and the lender has issued a letter to state this. For purchases like stocks and assets, buyers should keep receipts until they sell the asset, at which point they can discard the documentation. Stubs from paychecks and other payments should be kept for a year to check against formal tax statements, and they can be discarded if the income is correctly declared.
If paper receipts are not needed to provide information for tax purchases or prove payments, it is a good idea to keep receipts for credit and bank card transactions for two months. These receipts can be checked against statements and then discarded. If there is a dispute, the original receipt can help to clear the matter up, as it will provide information about when and where a purchase was made, and how much it should have been for. With cash receipts, it is only necessary to keep them long enough to record the expense.
Employees and others who use receipts to claim reimbursements for business expenses should make copies of their receipts and retain these copies when they turn in the originals. If there is an error or dispute with the reimbursement, the copied receipts will provide important evidence. These can also be useful if a supervisor complains about expenses, as the employee can show a detailed breakdown for any recent expenditures. Employees should keep this documentation for one year.
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