If you keep track of your personal finances using computer software packages, you still need to keep documentation substantiating the entries made in that software. You will also want to have adequate backup for your computer files or programs. If you have a home-based business or you are the owner of a small business, you should consider having an offsite contingency plan for recovery in the event of a power outage or computer breakdown.
Discarding Records that are no Longer Needed
When you decide it is no longer necessary to keep certain paperwork, it should be shredded before discarding it, to protect credit card numbers, bank account numbers, and personal privacy.
Summary
Keep a separate file of your tax returns, for at least 3 years, together with all the records that specifically support the items you report on each annual tax return.
Don’t forget to keep worksheets and other calculations.
Keep longer-term records that support the basis of your home, other assets and investments.
Keep a permanent file of records that you will need for income tax and other purposes on an ongoing basis.
In your income tax file, include copies of records you keep in other files that also serve to support items you report on your tax return, or make a notation or cross-reference to be able to identify and locate these records when needed for income tax purposes.
Back up your computer records.
Destroy personal documents once they are no longer needed, to protect your privacy and identity.