Why those canceled checks are worth keeping

Q: Should a person save cleared checks? If yes, then for how long should he or she file them away? I always throw them away, but I feel guilty doing so. In addition, I was told that the IRS does not view canceled checks as acceptable forms of receipts. If that's true, what's the point in keeping them?
L.L.C., via e-mail

A: Both tax and banking officials recommend that you hang on to your canceled checks in case you need them later. According to an IRS spokesman, the general rule is that canceled checks are considered acceptable forms of receipts in an audit.

The agency recommends keeping checks for up to three years from the date of filing your 1040, although in some rare cases (involving complicated tax situations), you may want to hold the checks for up to six years or longer.

Canceled checks can also serve as proof of a bill paid in the event of a dispute with a creditor, says John Hall, a spokesman for the American Bankers Association in Washington, D.C. Many banks now mail images of canceled checks, rather than the checks themselves, in their monthly statements to customers. Such banks usually maintain copies of those images.

Mr. Hall says banks usually send additional copies of the images to customers if they have been thrown out. Banks keep images between five and 10 years, depending on the state.

Q: My spouse was laid off last year, but is eligible for a pension from this company at a later date. Our calls to inquire into the details of the pension have only yielded a response of "we're working on it." What are a former employee's rights regarding the disposition of a pension? How can we ensure that payment amounts are correct and fair?
Name withheld, Danvers, Mass.

A: Check out the booklets "Protect Your Pension," and "What You Should Know About Your Pension Rights." Both are issued by the US Department of Labor and can be found on its website ( According to the Labor Department, your benefits office should provide a "summary plan" that shows how the pension is administered and how benefits are calculated.

If the former company does not provide one, you could file a lawsuit as a last resort.

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