It’s the final question you face over every piece of paper on your desk: What to keep and what to toss?

The wrong call leaves you with two unappetizing choices: either throwing away a potentially important document, or hoarding tons of old paper in yet another dusty filing cabinet.

Fortunately, a recent IRS “tax tip” gives some pointers on the basics of what the feds want you to keep:

• Tax records and related documents such as receipts, should be kept for three years after the filing year.
• Certain other records related to business or rental property and stock transactions should be kept longer — sometimes for as long as you hold the account or property.
• Employment tax records should be held for four years after the tax becomes due, or is paid — whichever date is later.

Your vendor records aren’t required to be held by the feds — but you may well have state requirements, especially for records that pertain to sales and use tax payments or state employment taxes. Check with your state Dept. of Revenue and Dept. of Labor to make sure you’re following best practices.

For more info on what is and isn’t required, check out IRS’ Publication 583 (Starting a Business and Keeping Records) and Publication 463 (Travel, Entertainment, Gift and Car Expenses).

Tags: Record retention, Reducing paper, Tax compliance