- Statements from credit cards: Unless they contain tax-related expenses, keep them for 60 days. Keep them for at least three years in these circumstances.
- Keep tax returns and receipts on file for at least three years, much like tax-related credit card bills.
- When you acquire new policies for your home and car, shred the old ones.
- Mortgage Statements and Home Improvements: When you sell the house, shred these documents.
I’m not sure how long I should keep my home expenses.
Bills for utilities, cable, and phone: Toss the banknote once you’ve determined it’s right. However, if you plan to deduct some of these expenses on your tax return, you’ll want to keep track of them (more on that in a moment).
Credit card statements: You generally don’t need to preserve this if you know all the charges are correct. However, if you make a large purchase and your lender provides product protections, keep that month’s payment. Also, save any deductible purchases on your bill for your tax return.
Medical bills: You probably don’t need to save these until you know your claim has been reimbursed by your health insurance company. Keep the bills if you’re planning to deduct medical expenses on your tax return.
Monthly/quarterly account statements: Save your investment and retirement account statements until you get the year-end statement, which recaps the preceding 12 months. There’s no need to keep the monthlies once you’ve determined that it’s correct.
Bank statements: Once you’ve verified that your monthly statement is accurate, you can discard it at the end of the year. Keep your check if you used it to pay for a significant or deductible item.
Pay stubs: If you still get them, throw them away after reconciling them with your W-2 at the end of the year. However, if you want to apply for a mortgage, your lender may require a few months’ worth of bank statements.
To hold for longer
Tax Returns: If Uncle Sam has questions about your tax returns, you don’t want to be missing tax-related documentation. Keep the tax returns and accompanying papers for a minimum of seven years. The IRS can audit you three years after you file a tax return, or six years if it believes you failed to record your income by at least 25%.
Year-end account statements: These will show you your investment’s cost basis, so save them for as long as you own the investment. (And then some more to back up your tax return.)
Keep your annual retirement plan statements for as long as you have funds in the accounts. This will ensure that your future withdrawals are taxed correctly. This is especially crucial if you want to show if you’ve put money into your 401(k) before or after taxes, and if you’ve saved for both standard and Roth alternatives. Keep Form 8606 the record that demonstrates whether your IRA contributions were deductible or not deductible for your IRAs.
Documents pertaining to the home: Keep all of your purchase documentation, as well as any home improvement records, because they can be used to calculate your cost basis when you sell your property, potentially saving you thousands of dollars in taxes. Keep records of any work that required a permit or a town inspection for as long as you own your home.
Keep your insurance plans for home/renters insurance, auto insurance, and umbrella insurance for the entire year. Toss the old one when you get a renewal. Keep your life, disability, and long-term care insurance as long as it’s valid.
To hold indefinitely
Keep all of your loan documents and contracts as long as you’re still paying off a loan (vehicle, home, student loan, etc.). The lender will offer you a payoff statement when you pay off the loan. Keep this for the rest of your life, just in case a zombie debt comes back to bite you.
The key stuff: While you can replace the documents below, it will be a tremendous pain. Invest in a firebox or a safety deposit box for the following reasons:
- Jewelry, art, and other precious property appraisals (unless you sell the item)
- In the event of a home fire, a recording of your home’s contents can aid insurance claims. This should be updated once a year.
A few thoughts on e-documents
You can download account statements and preserve the electronic versions if you prefer digital to print, but make sure they have a home outside of your hard drive.
You must ensure that you have access to your papers if your computer ever displays the dreaded blue screen of death.
You claim, however, that you can access previous statements using your online accounts. True, but do you really want to have to track down all of that? Furthermore, not all online accounts provide indefinite statements, so it’s best to be safe than sorry.
Rather, invest in an external hard drive and back it up on a regular basis to ensure you have everything you need.
Part 2 of How Not To Fail At Wedding Planning: The Things People Overpay For
When it comes to bills and documents, how long should I retain them?
KEEP FOR 37 YEARS Knowing this, it’s a good idea to keep any document that validates information on your tax return for three to seven years, including Forms W-2 and 1099, bank and brokerage records, tuition payments, and charity donation receipts.
Dave Ramsey, how long do you retain your utility bills?
That is debatable. Things like titles, deeds, mortgage statements, and even insurance policies should be kept for as long as you own your home (or for the life of the loan). And while you’ll be overjoyed when your mortgage payment is done and your house is paid off, you’ll want to keep those loan records for at least 10 years.
If you’re driving a car that you owe money on, now is the time to pay it off! However, you should keep track of your loan payments, contract details, titles, and proof of insurance for at least 10 years, just in case. Debt doesn’t always come back to bother you, but being prepared is always a smart idea. Pro tip: Use Financial Peace to pay off all of your previous debt and say goodbye for good. When it’s completely gone, you’ll breathe a sigh of relief!
When it comes to credit card invoices, how long should I retain them?
It’s usually a good idea to check your account statements for potential billing issues as soon as possible. However, you should save your statements for as least 60 days. Because the Fair Credit Billing Act (FCBA) requires the credit card issuer to obtain written notice of any errors within 60 days of delivering you the statement containing the error, this is the case.
You may wish to make your remark even lengthier in some cases. Listed below are a few examples:
- If you need to contest charges, you have at least 90 days to do so: If you filed a billing error dispute in accordance with the FCBA, you should keep your account statement at least until the dispute is resolved. After the creditor receives notice of your dispute, the process could take two billing cycles, but not more than 90 days.
- If you wish to keep track of your costs for a year, do the following: To track your spending habits, retain copies of your credit card statements for a year. This data might assist you in creating a budget.
- If you need to total up business expenses throughout a year, do so as follows: If you’re self-employed, you might use your credit card to pay for business expenses. You can sum up those business expenses for tax purposes using your statements at the end of the year. It may also aid in the calculation of deductions.
- Personal tax deductions last three to six years: It’s a good idea to have proof of expenses when claiming deductions on your personal income tax return, simply in case the Internal Revenue Service (IRS) conducts an audit. In that case, it will very certainly request supporting paperwork for any deductions you’ve claimed. And you can use your credit card statements as proof of those expenditures. The IRS audits returns submitted during the last three years, according to the IRS. However, it rarely goes back further than the previous six years. In either case, keeping credit card statements with documentation of deductions for six years after filing your tax return is a good idea.
- Extended warranties: If your credit card network, such as Visa or Mastercard, offers extended warranties on specific transactions, you may wish to maintain a statement for a few years. For example, let’s assume you buy a TV with a two-year manufacturer’s warranty and your credit card extends it for another year. Keep your credit card statement for that long period of time in case you require proof of purchase.
STATEMENTS:
In general, you should maintain a digital or print copy of your monthly bank and credit card statements for the previous year. The protocol for shredding papers like statements, on the other hand, differs by financial institution. Find out more in the sections below.
Credit card statements: Unless evidence of purchase is necessary for warranty or tax purposes, these statements can be shredded once they have been inspected for mistakes. Keep these statements safe until you’ve double-checked the charges and have confirmation of payment. You should keep them for three years if you need them for tax deductions.
Bank statements should be reviewed and stored every month for year-end accounting purposes. Documents can be shredded once taxes are filed, and your banking institution should be immediately available if needed. If your bank provides online statements, you can opt to receive your bank documents digitally instead of receiving them on paper.
Investment statements should be kept on file for the annual valuation until the end of the year. Keep the document for at least three years, as you may need it for capital gains tax purposes. When you sell stocks or properties, records like these help you keep track of your cost basis and the taxes you owe. You can trash your monthly and quarterly statements once you receive the annual summaries and your taxes have been filed.
VOUCHERS:
These documents contain any information you could need to defend yourself against potential litigation in the future. We’ll also cover important but frequently neglected details like how long a landlord should preserve old leases.
Investment acquisition: Documentation should be retained as a purchase record and should only be deleted after taxes are sold and submitted.
Landlords must know how long to preserve papers such as leases in their possession. Keep these papers in a safe place until the conclusion of the mortgage or lease term.
Payroll documentation: Because this sort of document contains a lot of important information, it should be saved as soon as it is received. Pay stubs can be shredded after they’ve been checked to employer data at the end of the year. Keep your pay stubs as well, so you may use them to double-check the accuracy of your Form W-2 when tax season approaches.
Manuals and warranties should be kept for the duration of the ownership period and then shredded.
Keep only the receipts you need for tax purposes and shred the rest. Nonetheless, you can keep your warranty or return it once it’s been filed.
Tax records: Tax returns and any supporting documents should be kept for at least seven years. Also, maintain your tax records for eight years if you file a claim for a loss due to an erroneous deduction. Before shredding, you might make digital copies of the crucial papers.
BILLS:
Bills are another type of document for which you should know how long to retain them. People often believe that once they have paid their bills, they may throw them away, but this is not the case. Because certain bills have a time limit, you should know how long you should hold them before shredding them.
Utility Bills: Keep these bills for a year and then throw them away. Only if you’re claiming a home office tax deduction are they required to be kept for three years.
You may require tax-related bills for your utility, cell phone, and cable if you own a business. However, as soon as you check that your money has been received, you can delete them. Furthermore, after the confirmation, you can utilize your monthly statement to dispose of bank withdrawal and deposit slips.
Medical Bills: Save your medical bill receipts for a year in case your insurance company asks for proof of a doctor’s visit or other medical claim verification. You can deduct medical expenses if they were more than 7.5 percent of your adjusted gross income in 2017 or 2018.
There have, however, been recent advancements. You can only deduct the amount of unreimbursed eligible medical expenses that exceed 10% of your adjusted gross income for the year. If you want to take advantage of this deduction, you must keep your medical documents for three years, according to tax records.
CONFIDENTIAL INFORMATION:
Any documents containing private information, such as social security cards, should be shredded to ensure that they do not get into the wrong hands.
Insurance policy: Records should be kept in a secure location for the duration of the policy. You may shred as soon as the policy is no longer valid.
Cheques can be shredded or destroyed after a year, depending on your financial institution’s regulations. In other circumstances, if the documents have been documented with your bank, you can shred them with you.
Although knowing how long to store records is crucial, there are some fundamental standards to follow when it comes to documentation. They are as follows:
Procedures For Converting To Digital-based
You don’t have to worry about deciding what to shred and what to save when you use digital records. After you’ve used our chart to determine how long you should store documents, you should complete the following:
A safe place to keep it: It’s best to keep it in a folder on a computer system. You can also save a copy of the file to your cloud or an external hard disk. This is the solution we offer because it’s time to go digital and conserve space!
– Make distinct folders for various types of documents, such as certificates, records, and legal paperwork.
After that, scan and file each document in a folder according to its content. To describe it, make sure to give each one a distinct filename so that it can be found quickly using your computer’s search feature.
Several apps are also available to assist you in quickly recording and storing a range of documents. Many can be operated using your smartphone or tablet, so you can get rid of paperwork even if you’re not near your home computer. Your business associates and banks must also be informed of your shift to the digital platform.
To keep your account information safe, use complicated passwords that you change frequently. Make sure your username and password are unique from those you use for personal email, online shopping, or social networking accounts. It’s also a good idea to install antivirus software on your computer. Godspeed!
What kinds of personal documents should be retained indefinitely?
According to Weltman, dividing your financial records into four categories is a smart place to start.
Keep it for no more than a year. Weltman recommends storing ATM, bank-deposit, and credit-card receipts until you reconcile them with your monthly accounts in this file. If you don’t need the paper papers or electronic data to support your tax return, shred them or securely discard them. Until fresh insurance policies and investment statements arrive, keep them.
Keep for at least a year. Keep all loan documentation until the loan is completely paid off. This is usually for a period of more than a year. Keep the title if you own a car until you sell it. Keep purchase confirmations until you sell stocks, bonds, or mutual funds, for example, so you can determine your cost basis and holding duration, according to McBride.
Keep it for at least seven years. The government has six years to collect the tax or file legal action if you fail to record all of your gross income on your tax filings. To be safe, maintain all tax records for at least seven years, according to McBride.
Keep indefinitely. Birth and death certificates, marriage licenses, divorce decrees, Social Security cards, and military discharge papers should all be retained for as long as possible. Keep any defined-benefit plan documentation, estate-planning documents, life insurance policies, and a list of what’s in your bank safe deposit box on hand as well.
What should you shred and what should you leave alone?
What to Shred: Eight Documents You Should Shred But Probably Aren’t
You can use a timetable or timeline to ensure that you stay organized with what records to save and what you should shred after you file your taxes each year.
Compare your pay stubs from the previous year to your W-2s when filing your taxes, and monthly brokerage statements to your 1099s in the same way. Shred the stubs and statements after you’ve filed your return.
Shred old tax return forms, W-2s, 1099s, K-1s, canceled checks, charitable contribution receipts, and other information utilized in previous taxes three years after filing.
While it’s not advised, if you fail to disclose more than 25% of your total income on your tax return, keep those W-2s, 1099s, and other tax paperwork for 6 years in case of an IRS audit.
Shred old tax documents for closed retirement accounts (such as IRAs) and losses from worthless securities or bad debt deductions after 7 years.
When it comes to saving mortgage statements, how long should you keep them?
The average homeowner keeps their statements for roughly three years. Even though your lender will have copies of your monthly billing statements, having the physical ones on hand is a good idea. If you find a mistake on one of your statements, you may wish to preserve it for a longer amount of time.
When it comes to bills and bank statements, how long should I retain them?
After seven years, destroy these documents (in whatever format): If you want to save your bank statements for tax purposes, save them towards the end of the year. Titles, contracts, and deeds for properties that have been sold, as well as any legal documents related to the transaction. Returns on income and accompanying financial documents.
