September 24, 2017
 
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Keeping Personal Financial Records: How Long is Long Enough?

When paying bills and organizing financial files, you may have questioned, “how long should I keep this?” or even “do I need to keep this?” Your files may be bursting at the seams and it’s time to clear them out. However, you don’t want to burn yourself by getting rid of something you may need, especially if Uncle Sam comes knocking at your door. Here is a quick summary of the basic types of papers to save and for how long.
 

 

Bills

1 year to permanently; typically you can shred the bill when you’ve gotten your cancelled check back from the bank.

 

If you pay electronically or by debit, keep your bank statements for proof of payment.

Credit card statements and receipts

45 days to 7 years; keep the receipts until you get the statements to reconcile. Any statement that includes tax related expenses should be kept for 7 years.

Bank records

1 year to permanently; any statement that includes tax related expenses should be kept. Shred unimportant bank records after 1 year.

Paycheck stubs

1 year or until you receive your annual W-2; make sure they match.

Home/condo records

6 years to permanently; keep all documents on the purchase price and all improvements.

Brokerage statements

Keep until you sell; keep all purchases and sales receipts to prove capital gains or losses for tax purposes.

Retirement/savings

plan statements

1 year to permanently; keep quarterly statements until you receive the annual summary and keep annual summaries until retirement or close the account.

IRA contributions

Permanently

 

Taxes

Returns, cancelled checks and receipts

7 years

The IRS has a 3 year statute of limitations from the filing date to audit the return if it suspects good faith errors; you have 3 years to file an amended return.

 

The IRS has 6 years to challenge your return if suspects your gross income was underreported by 25% or more.

 

Go to irs.gov for more detailed tax information.

 

 

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