How Long Do You Need to Keep All This Financial Paperwork?/ September 20th, 2021
With tax season right around the corner, you’ll likely find yourself wondering how long you should keep some of your paperwork. Well, here’s a handy primer.
When you no longer need any of the documents listed below make sure to dispose of them properly by shredding to keep personal information confidential—contact your credit union to ask when their next shred event is scheduled.
2 months to a year
Credit Card receipts/ statements and pay check stubs are information that should be kept up to a year.
Receipts and statements should be kept to review with your monthly statements, if their correct shred the receipts. Exceptions include: keeping receipts if you’re disputing a bill, covering a warranty or possibly returning an item.
With pay stubs, make sure they match your annual W-2 when received, then shred the stubs. If the information doesn’t match, notify your employer.
At least One Year
Retirement/ savings plan statements, Credit card records and bills are records that should be kept for at least a year.
Keep quarterly retirement/ savings statements until you receive your annual summary. If your annual summary is correct shred the quarterly statements, it’s best to hold on to annual statements until you retire or close an account.
Credit card statements should be gone through at the end of the year. Keep the statements related to taxes, business expenses, and housing or mortgage payments.
Bills of major purchases—cars, jewelry, furniture, computers, and so on—should be kept permanently or until sold in case of loss to show proof of their value. Other bills should be kept until they have cleared your account or the return and refund period has expired, then shred the bills.
Six years or longer
House records, tax records, IRA contributions, and other miscellaneous records should be kept for at least 6 years, if not permanently.
House Records such as purchase price information and the costs of improvements to your property, like remodeling should be kept the duration of ownership. Also, if you buy or sell property, keep the records of legal fees for six years after you sell your house.
Tax records should be kept for up to seven years, the IRS has three years to audit your returns, and you have three years to amend a return if you made a mistake. The IRS has six years to challenge if you underreported gross income by 25% or more.
IRA contribution records should be kept permanently in case you need to prove you paid taxes on money when you withdraw it.
The following miscellaneous records should be kept permanently: birth and death certificates, marriage license, divorce papers, military papers, insurance claims, accident reports and claims, proof of ownership and major debt repayment, legal correspondence.