We’ve all at one point or another been a little overwhelmed by how much paper clutter we have or which financial documents we are supposed to keep and which we can throw away. Keeping your financial documents in order knowing which financial records you can throw away and which you need to keep is one of the keys to sanity. To help you in all this I have created this handy little guide that tells you the expiration dates on your important personal finance records.
TAX DOCUMENTS – 7 Years
Returns, Receipts, W2′s, and records for tax deductions fall into this category
RETIREMENT ACCOUNT RECORDS – PERMANENT
Keep your annual summaries for as long as you have the account and until you retire.
If you make nondeductible contributions to an IRA then you want to make sure you keep the proof to show that you already paid taxes on that money
BROKERAGE & INVESTMENT RECORDS – Life of Account and/or 7 Years
The purchase and sale slips are the proof that show your profits and losses for tax time.
If they get used for tax time then it goes into the pile of that year’s Tax Documents
BANK RECORDS – 1 Year to PERMANENT
Save your bank statements for one year and then clear out anything that doesn’t have records of major purchases or expenses that have long-term value. An example would be bank statements that have major items you are taking tax deductions on or business expenses – these all go into the Tax Documents pile. You can shred the stuff that doesn’t have long term significance
CREDIT CARD RECEIPTS AND STATEMENTS – 1 Month to 7 Years
Save your receipts for purchases until you get your statement. If the statement and receipt match then you can dump the store receipt.
If the credit card statements are related to tax purposes then move them over to that year’s Tax Document pile and save them for 7 years
PAYCHECK STUBS – 1 Year
Hang on to your pay stubs until the begining of the year when you get your W2. Check and make sure that everything matches and then you can shred the stubs.
The W2 will need to be moved over to the – you guessed it – Tax Documents pile and kept for 7 years
HOME OWNERSHIP RECORDS – 7 Years to PERMANENT
You will want to keep all the records for purchasing your home or condominium including any major improvements or remodels
Also keep all the expenses for selling or buying property
- Real estate agent commission
- purchase and sale costs
- closing costs
- legal fees
These documents are essential when calculating the eventual capital gains or losses when you sell the home. Of course once that happens they then fall into the Tax Documents pile.
Hopefully that helps clear things up in knowing what you need to keep and what you can toss away. It’s time for some cleaning and shredding! As a resource I found this service that helps manage your documents by scanning them and storing them on a secure cloud network that you can access from anywhere. It’s worth a look, it seems like an interesting solution to the paper clutter problem. Check out ShoeBoxed.com
P.S. – Anybody else notice how many of these financial records end up in the Tax Documents pile? We truly have the most gargantuan and complex overwhelming tax system.
About Peter Serrano