How Long Do I Have To Keep These Papers?
One of people’s biggest fears about dealing with their paper clutter is that they’ll accidentally throw out something important. Of course, if you don’t deal with the clutter, you may never be able to find the important stuff, and that’s pretty close not having it in the first place, right?
Fortunately, what you have here is a handy guide to what you actually need to save, and for how long. Fret no longer!
Items to Keep Permanently
- Adoption and Custody Papers
- Advance Directive (living will/durable power of attorney for health care)
- Audit Records
- Birth, Marriage, and Death Certificates
- Citizenship and Naturalization Papers
- Capital Stock and bond records, record of interest coupons, options
- Charts of accounts
- Checks (cancelled), taxes, property purchase, special contracts
- Contracts, Promissory Notes
- Correspondence (legal, tax, other important information)
- Depreciation schedules
- House/condominium records — From six years to permanently. Keep all records documenting the purchase price and the cost of all permanent improvements, such as remodeling, additions and installations. Keep records of expenses incurred in selling and buying the property, such as legal fees and your real estate agent’s commission, for six years after you sell your home. Holding on to these records is important because any improvements you make on your house, as well as expenses in selling it, are added to the original purchase price or cost basis. This adds up to a greater profit (also known as capital gains) when you sell your house. Therefore, you lower your capital gains tax.
- Financial statements, year-end
- General private ledgers, year end trial balance
- Diplomas and Transcripts
- Employment Records
- Insurance Policies, Accident Reports, Records of Claims
- Insurance Records
- Inventory of Household Goods and Appraisals
- IRA Contributions
- Medical Histories
- Military Documents
- Minutes from meetings of stockholders, directors, committees
- Property, Real Estate Records: appraisals, costs, depreciation, blueprints, plans, etc.
- Separation and Divorce Paperwork
- Settlement Agreements
- Social Security Card — It is no longer recommended that you carry this with you, unless you need to show for specific identification purposes.
- Trademark registrations, copyrights
Items to Keep for 7 Years
- Accident Reports/claims
- Accounts Payable ledgers/schedules
- Accounts Receivable ledgers/schedules
- Checks, cancelled
- Credit card receipts and statements — from 45 days to 7 years. Keep your original receipts until you get your monthly statement; shred the receipts if the two match up. Keep the statements for seven years if tax-related expenses are documented.
- Inventories of products or supplies
- Payroll Records
- Personnel files
- Purchase orders
- Sales records
- Salvage records of inventory, sales
- Stock and bond certificates, cancelled
- Taxes — Returns, canceled checks/receipts (alimony, charitable contributions, mortgage interest and retirement plan contributions), records for tax deductions taken. The IRS has three years from your filing date to audit your return if it suspects good faith errors. The three-year deadline also applies if you discover a mistake in your return and decide to file an amended return to claim a refund. The IRS has six years to challenge your return if it thinks you underreported your gross income by 25 percent or more. There is no time limit if you failed to file your return or filed a fraudulent return.
- Time cards
- Withholding statements
Items to Keep for 3 Years
- Bank statements
- Employment Applications
- Insurance policies, expired
- Petty cash vouchers
- Sales commission reports
Items to Keep for 2 Years
- Bank reconciliation documents
- Correspondence, general
- Deposit Slips
Items to Keep for 1+ Year
- Bills: From 1 year to permanently. Go through your bills once a year. In most cases, when the canceled check from a paid bill has been returned, you can shred the bill. However, bills for big purchases — such as jewelry, rugs, appliances, antiques, cars, collectibles, furniture, computers, etc. — should be kept in an insurance file for proof of their value in the event of loss or damage.
Items to Keep for 1 Year
- Paycheck stubs. When you receive your annual W-2 form from your employer, make sure the information on your stubs matches. If it does, shred the stubs. If it doesn’t, request a corrected form, known as a W-2c.
Items to Keep for Duration of Ownership
- Brokerage statements
- Burial Lot Deed Motor Vehicle Titles, Purchase Receipts, and Licenses
- Records of Auto Service and Repair
- Retirement/savings plan statements. Keep the quarterly statements from your 401(k) or other plans until you receive the annual summary; if everything matches up, then shred the quarterlies. Keep the annual summaries until you retire or close the account.
- Auto Insurance Card and Registration
Items You Can Toss
- Receipts not necessary for tax or warranty purposes
Remember: Shred all financial documents when disposing of them.