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How Long Do You Really Need to Keep Those Papers?

Posted By Madison On In Organization | Comments Disabled

How long do you need to keep records? When we don’t know how long to keep something, we end up keeping it forever… or not at all.

Being organized is not the same thing as keeping all papers and financial records forever!

How long do you need to keep bank statements? How long do you need to keep tax records? What about all the copies of paper checks after they were deposited?

How Long Do You Need to Keep Records?

It’s time to take the paper trail and purge all the extra records you don’t need anymore! Here’s how long we should be keeping those important papers:

Forever

  • Birth Certificates
  • Marriage Certificates
  • Divorce Certificates
  • Death Certificates
  • Military Documents
  • Immunization Record
  • Employment Records (Why [1])
  • IRA Contributions (Why [2])
  • Social Security Card
  • Tax Returns: The IRS can audit [3] your returns from 3 years ago; 6 years if you grossly under reported; indefinitely if you filed a fraudulent return or did not file. So you could pitch your returns after 7 years… however, if they claim you didn’t file, and you pitched it… well, now you know why I put tax returns on the indefinite list! You can also request copies or transcripts of past tax returns [4]. For more details on how long to keep tax records, see the specifics on how long to keep tax returns below.

Keep During Ownership

  • Car Titles and Service Records
  • Receipts, Manuals, and Warranty Information for Appliances
  • Receipts for Major Purchases like Jewelry, Furniture, and Computers

Ownership Plus 7 Years

Even after you sell investments or real estate, you’ll still need to keep the gain or loss documentation for tax purposes.

  • Stocks, Bonds, and Investment Records
  • Savings Certificates
  • Home Improvement Documentation
  • Real Estate Records

7 Years

Many of the following will contain information that supports tax returns. Therefore it’s best to keep the following for seven years:

  • Canceled Checks
  • Credit Card Statements
  • Old Bank Statements
  • Retirement Plan Contributions
  • Supporting Documentation for Tax Returns

Until Specified Date

  • Annual Retirement Statements: Until retirement and funds are exhausted.
  • Insurance Policies – Until property is sold, policy expires, and all claims are settled.
  • Wills: Until replaced by a new one.

Throw Away

  • Receipts not used for Warranties, Taxes, or Insurance
  • Paycheck Stubs: Once you get your W-2, you can toss them
  • Phone Bills not needed for taxes
  • ATM Receipts
  • Grocery Receipts

How Long Do You Need to Keep Tax Records?

Special rules exist when it comes to your tax records. According to the IRS, here are the guidelines on how long to keep tax records:

Keep Tax Returns Forever

  • If you filed a fraudulent return, keep your tax returns forever.
  • If you did not file a return, keep your tax records forever.

Keep Tax Returns for 7 Years

  • If you claimed a worthless security loss or deducted a bad debt, keep your tax records for 7 years.

Keep Tax Returns for 6 Years

  • If you grossly underreported your taxable income (more than 25% of the gross income on your return), keep your tax return for 6 years.

Keep Tax Returns for 3 Years

  • If the above don’t apply, keep your tax returns for 3 years.
  • If you filed an amended tax return [5], keep your tax return for 3 years or 2 years from when you paid the tax if it’s later.

Other Tax Records to Keep
In addition to keeping your tax return, you’ll also need to keep information that supports those tax returns including:

  • Canceled Checks
  • Credit Card Statements
  • Old Bank Statements
  • Retirement Plan Contributions

More Ways to Get Organized