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How Long Do I Need to Keep This Paper?

by Maria Gracia Join our newsletter to be notified when the newest Organizing Article is available. Every year April 15 rolls around, and every year people ask me the infamous question, “How long do I need to keep all this paperwork?!” If you’re wondering how long you need to store paperwork that you'll probably never look at again, some basic records retention rules are below. Please note that, these days, some of the below paperwork can easily be accessed online through your bank, insurance company, etc. If this is the case, you may not need to keep the paper versions if you prefer accessing when you need to and have the ability to do so: Audit Reports: Forever. Bank Deposit Slips: Once you’ve confirmed that the deposit successfully went through, you can shred it and get rid of it. Bank Statements: 1 Year, as long as there is nothing tax-related on a particular statement, such as a charitable donation. For statements with tax-related entries, keep for three years. Brokerage Statements: Keep until you sell the security. You need the purchase/sales slips from your brokerage or mutual fund to prove whether you have capital gains or losses at tax time. Receipts for Restaurants, Groceries, Clothing, Gas, Books, and other small purchases: Keep your original receipts at least until you’ve verified the charge against your debit or credit card statement. Then you can toss it, unless you need to save it for reimbursement from your workplace. If there’s a chance you’re going to return or exchange whatever you bought (like clothing), keep that receipt for 30 to 60 days which is usually how much time retail stores will give you. Receipts for Major Appliances, Expensive Sporting Equipment, Computers, and other Big-ticket Purchases: Keep your original receipts until the warranty period is up or until you no longer own the item. Current Contracts and Leases: Life of the contract, plus 3 Years. Housing Records: As long as you own the home, plus 6 years. 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. Insurance Records: Life of the policy, plus 10 years. Investment Records: 6 Years after the sale of the investment. Discard your monthly statements once you receive the annual summary that reflects yearly activity. IRA Contributions: Forever. If you made a non-deductible contribution to an IRA, keep the records indefinitely to prove that you already paid tax on this money when the time comes to withdraw. Legal Correspondence: (Marriage Certificates, Death Certificates, Divorce Papers, etc.): Forever. Paid Bill Statements: 1 Year. Pay Check Stubs: 1 Year. Retirement and Savings Plans: From one year to permanently. Keep the quarterly statements from your 401(k) or other plans until you receive the annual summary; if everything matches up, then toss the quarterlies. Keep the annual summaries until you retire or close the account. Tax Returns and Supporting Documentation: 7 Years (or longer if you feel you’re in danger of getting audited.) 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 under-reported 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. Warranties/Guaranties: Keep for the life of the product. Finally, if you have a question about paperwork that is not listed above, please contact me. I’ll respond…and I will update this article for others with the same question. Back to Organizing Articles Index
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How Long Do I Need to

Keep This Paper?

by Maria Gracia Join our newsletter to be notified when the newest Organizing Article is available. Every year April 15 rolls around, and every year people ask me the infamous question, “How long do I need to keep all this paperwork?!” If you’re wondering how long you need to store paperwork that you'll probably never look at again, some basic records retention rules are below. Please note that, these days, some of the below paperwork can easily be accessed online through your bank, insurance company, etc. If this is the case, you may not need to keep the paper versions if you prefer accessing when you need to and have the ability to do so: Audit Reports: Forever. Bank Deposit Slips: Once you’ve confirmed that the deposit successfully went through, you can shred it and get rid of it. Bank Statements: 1 Year, as long as there is nothing tax-related on a particular statement, such as a charitable donation. For statements with tax-related entries, keep for three years. Brokerage Statements: Keep until you sell the security. You need the purchase/sales slips from your brokerage or mutual fund to prove whether you have capital gains or losses at tax time. Receipts for Restaurants, Groceries, Clothing, Gas, Books, and Other Small Purchases: Keep your original receipts at least until you’ve verified the charge against your debit or credit card statement. Then you can toss it, unless you need to save it for reimbursement from your workplace. If there’s a chance you’re going to return or exchange whatever you bought (like clothing), keep that receipt for 30 to 60 days which is usually how much time retail stores will give you. Receipts for Major Appliances, Expensive Sporting Equipment, Computers, and other Big-ticket Purchases: Keep your original receipts until the warranty period is up or until you no longer own the item. Current Contracts and Leases: Life of the contract, plus 3 Years. Housing Records: As long as you own the home, plus 6 years. 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. Insurance Records: Life of the policy, plus 10 years. Investment Records: 6 Years after the sale of the investment. Discard your monthly statements once you receive the annual summary that reflects yearly activity. IRA Contributions: Forever. If you made a non-deductible contribution to an IRA, keep the records indefinitely to prove that you already paid tax on this money when the time comes to withdraw. Legal Correspondence: (Marriage Certificates, Death Certificates, Divorce Papers, etc.): Forever. Paid Bill Statements: 1 Year. Pay Check Stubs: 1 Year. Retirement and Savings Plans:  From one year to permanently. Keep the quarterly statements from your 401(k) or other plans until you receive the annual summary; if everything matches up, then toss the quarterlies. Keep the annual summaries until you retire or close the account. Tax Returns and Supporting Documentation: 7 Years (or longer if you feel you’re in danger of getting audited.) 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 under-reported 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. Warranties/Guaranties: Keep for the life of the product. Finally, if you have a question about paperwork that is not listed above, please contact me. I’ll respond…and I will update this article for others with the same question. Back to Organizing Articles Index
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