Taxes are filed for 2014. Each year as I organize tax information and complete the necessary forms, I always wonder what I can and what I cannot get rid of. This is a common question among many people especially when it comes to keeping tax records.
In most cases the Internal Revenue Service (IRS) has three years to audit federal income tax returns. In unusual cases, this limit does not apply. If you failed to report more than 25 percent of your gross income, the IRS has six years to collect the tax or start legal proceedings. There is no limit if you failed to file a return or willfully filed a fraudulent return. Some experts recommend keeping your actual tax returns for life. Receipts, statements and W-2s should be kept for at least seven years.
Receipts are important because the IRS doesn’t accept a cancelled check as proof of payment. However, your bank statement can help you recall certain purchases; therefore, you might want to keep them.
Store the records you will need to keep in a safe place. You will want to keep a permanent file of items that are necessary to keep forever. They would include birth certificate, warranty deeds, marriage license, death certificates, and other important papers. It is also a good idea to keep all medical bills and insurance claims until they have been paid in full.
Items to discard include receipts that are not needed for proof of purchase or income tax purposes; for example: checks for groceries, clothing, and monthly utility bills. Keep a record of any major purchases such as appliances or furniture. You can discard them when you replace them. You do not need to keep sales receipts that have been recorded in your checkbook or family account record book unless you plan to use them for tax purposes. Discard warranties that have expired. Also discard any owner’s manuals of items that you no longer have.
Records should be stored in a way to prevent damage as well as loss. Be sure to keep the records where they will not mildew or get wet. File cabinets are the most common place to keep records at home.
Setting up the home filing system can be quite a chore. The University of Arkansas Cooperative Extension Service has some great fact sheets to help you. They include “A Sample Filing System,” “Household Inventory,” “Preparing Family Net Worth and Income Statements,” “Replacing Valuable Papers,” and “Safe Deposit Box Inventory.”
You may decide to store your papers using technology. If you save your information electronically, be sure to protect your password on your computer and think twice about free online storage unless you are certain it’s encrypted.
Care should also be taken in destroying your important papers. A safe rule of thumb is shred anything that includes your name, address, or any other sensitive information. Our local recycling center will shred paperwork for you while you watch. It takes only a few minutes, but it can help protect your identity. Items to shred might also include utility bills, credit card statements and receipts that are no longer needed.
If you would like more information on how long to keep important papers or if you would like a copy of any of the fact sheets mentioned, feel free to contact the Howard County Extension Office at 870-845-7517 or visit our office located on the second floor of the courthouse.
Recipe of the Week
Springtime makes me think of great desserts such as lemon bars. This recipe was submitted by Samuel Rodgers, a member of the Sharp Shooters 4-H Club. Samuel won 1st place in the 4-H Cookie Contest earlier this spring with this recipe.
Luscious Lemon Bars
2 ¼ cups all-purpose flour, divided
½ cup powdered sugar
1 cup cold butter, cut into pieces
4 large eggs
2 cups granulated sugar
1 teaspoon lemon zest
1/3 cup fresh lemon juice
½ teaspoon baking powder
Preheat oven to 350 degrees. Line bottom and sides of a 13 x 9-inch pan with heavy-duty aluminum foil or parchment paper, allowing 2 to 3 inches to extend over sides; lightly grease foil.
Stir together 2 cups flour and ½ cup powdered sugar. Cut in butter using a pastry blender or fork until crumbly. Press mixture into bottom of prepared pan. Bake at 350 degrees for 20-25 minutes or until lightly browned.
Meanwhile, whisk eggs in a large bowl until smooth; whisk in granulated sugar, lemon zest, and lemon juice. Stir together baking powder and remaining ¼ cup flour; whisk into egg mixture. Pour mixture over hot baked crust.
Bake at 350 degrees for 25 minutes or until filling is set. Let cool in pan on a wire rack 30 minutes. Lift from pan, using foil sides as handles. Cool completely on a wire rack (about 30 minutes). Remove foil, and cut into bars; sprinkle with powdered sugar.
Jean Ince is the University of Arkansas Extension Service’s Howard County staff chair.