Stay In Your Groove
(Keeping Records Without Going Off Track )


Q: How long should I keep tax records?
B. Madoff, investor

A: In general it’s advisable to save documentation supporting your tax return for seven years. The IRS generally has three years from the date of filing to audit your return, but up to seven if it suspects you under-reported your income. If you didn’t file or filed fraudulently there is no time limit — so keep meticulous records of your embezzlement, okay?


Q: Is there an easy way to do this without cluttering my cell?
A. Capone, Alcatraz

A: Digital is the way to go,Al. Scan your paper receipts and tax documents into a file and archive it. Once a year send a back-up to your CPA, ex-wife or Elliot Ness.


Q: I freelance a bit mixing investments and putting distance between people and their money. What else should I save?
C. Ponzi, Roma

A: If you are a freelancer like Chuck who files a “Schedule C” and deducts expenses from self-employment income, save all the documentation supporting your income and expenses.


Q: I put all my business expenses on my Worldwide Wrestling Federation credit card. Need I save all the underlying receipts?
B. Cianci, candidate

A: Depends if the nature of the activity is evident by the description on the statement. Motel Six is for lodging but Target could be for your pet’s dog food or your kennel business. A credit card and/or bank account used exclusively for business is also helpful.


Q: I preach impermanence but am told some things should be saved permanently. Advise.
S. Buddha, India

A: Some examples might be business tax returns, home purchase documents and investment records if you purchase securities independently of a broker. If you are a partner in a business, save any documents related to what you paid for your share and how profits and taxes are to be allocated.


Q: How else can I be efficient and tidy in keeping records?
M. Stewart, fussy

A: If you deduct medical expenses ask the drugstore for a print-out of your prescription drug purchases, recreational marijuana use and the number of times you had a question for the pharmacist. If you have a business or rent property a bookkeeping system or qualified bookkeeper is essential. (Balancing Act, — part of my company — does that, and we know others.)

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