How long to keep your tax, financial and other documents
With the start of tax season, you’ll probably find yourself digging through paperwork in the months ahead. Depending on how many documents you have on hand and how well you organize them, this can be quite the task. To make your tax preparation easier, reduce the clutter in your home and keep your important information safe, now may be the perfect time for you to securely discard the documents you no longer need. Here are recommendations for how long to keep many common documents.
Keep for less than a year
- Deposit and withdrawal records, bills and receipts (until reconciled with bank statements and no longer needed for tax returns or other purposes)
Keep for a year or more
- Pay stubs (to verify the accuracy of each year’s W-2)
- Bank and credit card statements
- Investment statements and purchase confirmations
Keep for seven years
- Supporting tax documents (receipts, W-2s, bank interest forms, etc.)
- Tax returns
- Birth and death certificates
- Marriage licenses
- Divorce decrees
- Social Security cards
- Loan documents
- Major home improvement receipts
- Vehicle titles
- Insurance policies
- Military discharge papers
- Defined-benefit plan documents
- Estate-planning documents
To cut down on the amount of paperwork you need to manage, you can check with your bank, credit card, investment and other providers to see if they offer an e-documents option. This may allow you to access digital copies of your documents from each provider’s website as needed and receive email notifications when new documents are available.
Important documents should be stored in a secure place, such as in a home safe or a bank safe deposit box. When hardcopies aren’t required, documents can be scanned and stored on a password-protected computer system, either on a home computer with a backup service or on a web-based storage solution such as Google Drive or Dropbox.
Hardcopy and digital documents both need to be securely destroyed when discarded. Paper documents should be thoroughly shredded. Digital files on personal devices, even when conventionally deleted, may still be recoverable (such as after you sell an old computer), so they should be encrypted or securely deleted.
By adopting these good document filing habits, accessing what you need, when you need it will be easier, tidier and more secure.
Draper and Kramer Mortgage Corp. does not offer tax advice. Please contact your tax professional for any tax-related questions.