Taxation has always been a controversial issue for Americans. Regardless of our feelings, most of us pay our taxes yearly in compliance with the law. That raises the question how long to keep pay stubs, bills and other financial records.
For most, the process is easy. We get our pay stubs in the mail, submit them to the IRS, and pay or receive our share of the tax burden. Then, we go on to forget about it until next year.
But, what about those of us who get audited? How do you determine how long to keep pay stubs for proof? If you’re looking for answers, then you’ve come to the right place.
Read on to learn everything you need to know about storing your important documents.
Why You Need to Document Your Earnings
What is an audit, anyway? Why is it important to keep your pay stubs after you’ve already submitted them to the IRS?
IRS audits are like a manual check on certain tax returns. It’s a process that seeks to verify your records are accurate. The odds you’ll get selected for an audit are very low, but it still happens to people each year.
If you’re selected for an audit, then don’t feel distressed. You need to provide the proof to the IRS that your records are accurate. That means you’ll need your pay stubs.
You may also get audited by other sources — like your manager or business owner. External audits are often done by insurance companies, too.
Determining How Long to Keep Pay stubs
With all this in mind, how long should you hold on to your pay stubs? Experts suggest keeping them for at least one year. After two years, you can discard them.
Do you want to keep a paper copy of your pay stubs, but you don’t get them from your boss? Consider creating your own. You can use thepaystubs.com to do so.
Smart Storage for 2020 and Beyond
You get pay stubs at least once a month. You may even get them every week. On top of that, there are other pay-related documents you’ll want to keep, too. Here are a few other documents to save:
- Tax returns
- Records related to legal filings
- Records related to inheritances
- W-2 or 1099 forms
So, how are you supposed to keep up with all these papers for a year or more? You could always invest in a fire-proof safe or storage cabinet. Or, you could join the rest of us and start storing your important documents in a digital format.
You could create an offline electronic file on your computer. If you feel comfortable, you could even upload your information to a cloud storage space. These options will reduce clutter and keep everything organized.
Securing Your Financial Future
Tax time for 2019 is approaching soon. With your new knowledge about how long to keep pay stubs, you should feel prepared. Once you file, be sure to save your latest return, too.
Saving and securing these documents helps protect your financial future. So, make the move now and start storing them.
Are you interested in getting more financial tips to help you out of your rut? Browse around our blog page for more of our latest content.