How Long Should You Keep Financial Documents?

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Worried about an audit from the IRS? Have a stack of old credit card bills and bank statements cluttering your desk? Well, here are some great tips for how long to keep important financial documents: Tax returns and proof of filing: Forever – in case you are audited. Documents Supporting Tax Returns (W-2, 1099, receipts…

Worried about an audit from the IRS? Have a stack of old credit card bills and bank statements cluttering your desk? Well, here are some great tips for how long to keep important financial documents:

  • Tax returns and proof of filing: Forever – in case you are audited.
  • Documents Supporting Tax Returns (W-2, 1099, receipts to prove deductions, etc.): Six years. The IRS has up to three years from when you file to look for errors on your return and up to six years to audit you if it suspects you under reported income by 25 percent. (There’s no limit if fraud is involved.)
  • Receipts: Until the warranty expires, or for as long as you need them for tax purposes.
  • Securities Statements (stocks, bonds, mutual funds, etc.): For 6 years after you sell them; to prove a profit or loss for tax purposes
  • Medical Bills: 1 yr, unless deducting for taxes, then 6 years.
  • Pay Stubs: Until your W-2 arrives; (Be sure to double check it for accuracy on a regular basis!)
  • 401k and IRA Statements: Until your year end statement arrives. Keep your year end statements for at least 6 years for tax reasons.
  • Bank Statements: 1 year to confirm 1099.
  • Utility Bills: 1 year to track usage, assist with budgeting. If you claimed a home office on your taxes, keep your records for six years.
  • Credit Card Statements: 1 month for most, so you can reconcile your purchases. Keep them for longer if needed for tax reasons.

This is great advice to simplify book keeping and getting rid of clutter! It’s much easier to do if you take care of things as they come in instead of trying to do a year’s worth of book keeping in one sitting. So take the 15 minutes a week and get organized!

Don’t forget to shred any documents that have important personal or financial information before throwing them out! Many of these important documents contain all the information identity thieves need to steal your identity and ruin your life.

Every year there are thousands and thousands of people who fall victim to identity theft. Shredding your old documents is one simple way you can ensure you’re not one of these unfortunate Americans.

One way you can save your documents without having them clutter up your house is to scan them into your computer. With any of the documents you don’t need to keep, but you’re scared to shred, you can scan them and then put them in a folder on your computer. This is a great way to clean out your junk drawers without having to trash all of those documents.

On a similar note, it’s vital you’re properly storing your important documents.

If you can’t find the document that you need, keeping it isn’t going to do you that much good. It won’t take you long to file all of the documents in an appropriate category, shred the old documents, or scan the ones you want to keep. Having a clean filing system will make your life much easier in the future when you need to access those documents.

Related Post: How We Manage Our Money on a Daily Basis



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About Ryan Guina

Ryan Guina is the founder and editor of Cash Money Life. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started Cash Money Life in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about military money topics and military and veterans benefits at The Military Wallet.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free account here.

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