What to Keep, What to Shred

We often are asked the question of how long old paperwork, taxes and documents must be kept.   We are posting this just in time for our local clients and friends to take advantage of our annual shred week!

Permanent Records:

Personal papers such as birth certificates, Social Security cards, military documents, passports, marriage certificates, divorce decrees, insurance policies, veteran’s discharge papers, will, living wills, deeds and property titles and important contracts are PERMANENT records that should be kept indefinitely, preferably in a fire proof box. You will need them to re-establish your financial life in the event of fire, theft, or other disasters.

Tax Records:

You should save tax related documents, such as receipts that support deductions, for a minimum of three years after you file your original return, Under normal circumstances, the IRS has three years from the date of filing to audit. Tax returns should be kept for a minimum of seven years.

Checking Account and Credit Card Statements:

Once you have reconciled your account statement, you may discard it, unless it shows deductible expenses. If so, you should retain your statements and cancelled checks for at least three years after you file. The same holds true for credit card statements. You can discard deposit slips and ATM receipts after you verify the transactions on your statements.

Investment Account Statements:

Monthly or quarterly investment statements can be shredded once you receive your year-end statement and confirm that it accurately recaps your transactions for the year. You should keep trade confirmations (for non-IRA accounts), showing the purchase and sale of mutual funds and stocks. These records should be held for three years after you report the capital gain or loss on your tax return and kept with your tax records.

Annual Reports:

Annual reports and other books you received from the fund companies can be tossed if you don’t want/need them anymore.

Retirement Plan Statements:

You should keep your quarterly statements until you receive your annual summary. Once you’ve compared the information, you can toss the quarterly statements. Keep the year-ends. Closed IRA’s and 401(k) statements can be shredded once you are sure all correct balances have been transferred to your new account.

Pay Stubs:

You should keep pay stubs until you have reconciled the totals with your Form W-2. If the amounts match, you can destroy them.

Utility Bills:

Unless you need them to support the home office deduction, you can generally dispose of utility, phone, and cable bills once paid. Also, old car payment or loan books with monthly payment coupons that banks gave out can be shredded once the loan is paid off.

Leave a Reply

Your email address will not be published. Required fields are marked *