How Long to Keep Financial Documents
Here’s a guide of which financial documents to keep and for how long.
Receipts for anything you might itemize on your tax return should be kept for three years with your tax records.
HOME IMPROVEMENT RECORDS
Hold these for at least three years after the due date of the tax return that includes the income or loss on the home when it’s sold. If you plan to sell the house, and you have made improvements to it, keep receipts for those improvements for seven years — you may need them to lower the taxable gain on the house when you sell it.
Keep receipts for medical expenses for one year, as your insurance company may request proof of a doctor visit or other verification of medical claims. If your medical expenses totaled more than 7.5% of your adjusted gross income in 2017 or 2018, you can deduct them—but remember, starting the beginning of this year (Jan. 1, 2019), you may only deduct the amount of the total unreimbursed allowable medical care expenses for the year that exceed 10% of your adjusted gross income. If you take that deduction, you’ll need to keep the medical records for three years for tax records.
Keep pay check stubs until the end of the year, and discard them after comparing to your W-2 and annual Social Security statements.
Keep for one year and then discard — unless you’re claiming a home office tax deduction, in which case you must keep them for three years.
CREDIT CARD STATEMENTS
Keep until you’ve confirmed the charges and have proof of payment. If you need them for tax deductions, keep for three years.
INVESTMENT AND REAL ESTATE RECORDS
Keep for three years, as you may need the documentation for the capital gains tax if you’re audited by the IRS. These records help track your cost basis and the taxes you owe when you sell stocks or properties. Once you receive the annual summaries, you can shred your monthly statements.
Most bank statements should be kept accessible in hard copy or electronic form for one year, after which they can be shredded. Anything tax-related such as proof of charitable donations should be kept for at least three years. You’ll need bank statements for up to three years if you are audited by the IRS. If your bank provides online statements, you can switch to receiving your bank documents online and cut down on paper.
Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
Keep records indefinitely if you do not file a return.
Keep records indefinitely if you file a fraudulent return.
Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
RECORDS OF LOANS THAT HAVE BEEN PAID OFF
Keep for seven years.
ACTIVE CONTRACTS, INSURANCE DOCUMENTS, PROPERTY RECORDS OR STOCK CERTIFICATES
Keep all these items while they’re active. After contracts are completed or insurance policies expire, you can discard these documents.
MARRIAGE LICENSE, BIRTH CERTIFICATES, WILLS, ADOPTION PAPERS, DEATH CERTIFICATES OR RECORDS OF PAID MORTGAGES
Keep these documents forever.