Many of us have an overwhelming amount of paper that enters our homes; and it can be hard to know what to do with it all. Mail, Receipts, Financial Documents, Personal Documents, Business Documents and more all pour in from every side. And every life needs documents – digital and physical – to have security and necessary information handy or to keep ‘just in case we need it later’ for taxes, buying or selling something, or insuring something.
We all need some idea of what to save, what to toss, what to shred, and what can be scanned or stored into a digital filing system.
So, below is a quick guide to how long you need to save many of the documents we tend to collect.
HOW LONG SHOULD YOU KEEP FINANCIAL DOCUMENTS?
Seven Years or Longer
Tax records are something that we should always keep for at least seven years whether we have a small business or just pay our personal taxes every year. The IRS statute of limitations for auditing is three years; but there are occasions where they can go back as far as six or seven years. For instance, if you underreported income by 25% or more. State statutes of limitations can differ, so its always recommended to check with a tax professional on the limitations in your state.
You should also save documents that verify the information on your returns in the same file for easy access. These include W-2 and 1099 forms, receipts, and payment confirmations, bills of sale or purchase for things like homes, cars, recreational vehicles, etc. as well as receipts for home remodeling and repairs.
One to Two Years
Documents in this category include non-tax-related bank and credit card statements, investment statements, pay stubs and receipts for certain purchases that are under warranty. However, many of your statements and paystubs can be gotten digitally on request from your financial institution, place of work, or other businesses and, so, no longer need to be kept in physical form. It can be a big relief to ‘go paperless’; and this can also encourage us to pay closer attention to the bills we pay if we go online to verify our activity when it comes time for any recurring payments.
The Federal Trade Commission suggests holding onto your paid medical bills for a year, longer if there are unresolved insurance disputes. Medical billing can be a confusing process and having records on hand to dispute payments or errors in billing is a smart move. Keep them handy until everything has been resolved and the dispute settlement has been verified.
If you want to cut down on excess document clutter in your home or business, or if you want to keep documents for much longer periods than usually recommended, consider creating electronic files by scanning or uploading the documents into a digital filing system for access down the road. Sometimes keeping various documents digitally can help us to avoid any anxiety that might arise when the original paper documents are disposed of.
Less Than a Year
Of course, some documents don’t need to be taking up space in our home, business, or digital storage at all. For example, don’t worry about keeping receipts unless they are for Warrantied Products, Tax Returns, or Insurance Claims. You can toss any paper monthly bills as soon as they’re paid or at least when they show in your bank account. And, though most banks no longer mail back canceled checks, if your bank does then these are fine to shred once you’ve verified your bank statement is correct.
Save These Forever
There are plenty of documents that you can dispose of after a relatively short time; but there are some important physical documents that you should keep indefinitely. These include Birth Certificates, Social Security Cards, Marriage and Death Certificates, Adoption Papers, Passports, Wills and Living Wills, Powers of Attorney, Beneficiary Forms, Legal Filings, Divorce Papers, Military Records, Retirement and Pension Plans, and Inheritance Documents.
In the end, you should also save anything that you feel you may need. It’s always best to err on the side of caution. Keep any documents until you’re sure you no longer need them; and if you remain unsure, it’s always good to bring in a professional who can help you decide.
FOR QUICK READS ON DOCUMENT STORAGE SOLUTIONS AND DISPOSAL READ OUR POST: 'DOCUMENTS: KEEP AND STORE OR SHRED AND TOSS?'
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