What Personal Documents Should You Keep and for How Long?Keep until warranty expires or can no longer return or exchange
What to keep for 1 month
What to keep for 1 year
What to keep for 3 years
What to keep for 7 years
What to hold while active
Keep Forever
*These documents should be kept in a very safe place, like a safety deposit box. Show
When it comes to your finances, it’s important to be organized and keep track of your bank statements, tax returns, and other financial documents. But how long should you hold on to these documents? In this blog post, we’ll provide some tips on how long to keep bank statements, as well as other types of financial documents, and give you some advice on when it’s time to shred them. How Long to Keep Bank StatementsApart from providing proof of payment in case of a dispute, access to your most recent purchases, bill payments, and payroll deposits is required for a variety of reasons, which is why keeping your bank statements is quite an important thing to do. But how long should you keep bank statements? Although this is determined by a variety of factors, generally speaking, you should keep them from one month to three years, depending on the type of document in question: Keep a Month (Regular Statements and Pay Stubs)Keep a digital or hard copy of your last month’s bank and credit card statements for reference. If you go paperless, make sure to save your digital versions online. You should also keep pay stubs so that you may use them to verify the accuracy of your Form W-2 when tax season arrives. Keep a Year (Utility Bills, Deposits, Withdrawal Records)If you’re self-employed, asking yourself ‘How long do we have to keep business records?’ may be crucial since you may need your utility, cable, and cell phone bills for tax purposes. However, you can dispose of them as soon as you verify your payment was processed, and dispose of bank withdrawal and deposit slips after verifying them with your monthly statement. How long you should keep your bank statements will also depend on how you’ve received them:
Whatever the case, you should review your statements at least once a month to ensure there are no unpleasant surprises. How Long Should You Keep Tax Returns?Wondering how long should you keep tax returns? Your tax returns are vital documents to maintain as part of your financial history. You’ll want a permanent electronic form or hard copy of each year’s tax return and any payments you make to the government. It’s also a good idea to keep track of important financial occurrences, such as legal actions or inheritances, by keeping paperless statements that you can access online at any time and store them securely there. In most circumstances, the answer to how many years of tax returns should you keep is a minimum of three years. You should keep any supporting tax documentation for 3–7 years from the date you filed or the due date of your tax return, whichever is later. The IRS may be able to ask you for supporting documentation for three to seven years after you file a return, so a good rule of thumb is to keep any document that confirms the information on your tax return—including Forms W-2 and 1099, bank and brokerage statements, tuition payments, and proof of charitable donation—for at least three years. The following list contains the key information in regards to how long to keep personal tax returns, according to the period of limitations that applies to income tax returns:
This list is a practical indication of how long you should keep tax returns, but you should always try to get a free tax consultation just to be on the safe side. DID YOU KNOW: When you own real estate, the answer to how long to keep personal tax returns is three years after selling the property and filing the related tax documents, including depreciation, amortization, and depletion deduction records, all of which influence whether you’ll realize a profit or suffer a loss when selling your property. Key Takeaways
Is There Any Reason to Keep Old Bank Statements?Keeping records of recent purchases, bill payments, and payroll deposits is necessary for a variety of reasons, not only as evidence of payment in the event of a dispute. You should also make sure to make an “important papers to keep” checklist, and check your bank account activity frequently for evidence of identity theft and debit card fraud (though, to be safe, you should get identity theft protection from a reputable firm). Your bank statements can serve as proof of illegal conduct and be used to recover any damages, but you can need them for different reasons too. Here are some of them: Tax-Related ReasonsOne of the most common reasons for needing bank statements is to have evidence of a source of income, deduction, or credit for the IRS. When preparing your income taxes, you should check your bank statements to verify your earnings and expenditures like charitable donations and business costs. Knowing exactly how long do you need to keep bank statements for large transactions or payments may also be helpful, as you could need evidence of purchase to file an insurance claim or use a warranty, for example. In addition to the IRS posing a limitation on income tax returns that restricts how long you have to amend your return, request a refund, or claim a credit, the IRS’s ability to assess extra tax is also restricted by the period of limitations. Being unable to get access to your bank statements because you’re not familiar with the IRA record retention rules can cause you problems when trying to claim a credit or refund on your tax return. Furthermore, if the IRS determines additional taxes are owed and you know they aren’t valid, you’ll need bank statements to demonstrate this. Other Reasons to Keep Your Bank Statements
Why You Should Shred Certain DocumentsWhen it’s time to discard your documents such as statements, bills, or pay stubs, don’t just throw them in the garbage, as they contain personally identifiable information (PII). Apart from knowing how long to keep pay stubs and other papers containing PII, you should also know how to properly dispose of them for several reasons:
Instead of throwing them away intact, you should securely shred these documents because identity thieves might be able to discover your sensitive data this way. If someone gets their hands on your old bank statements or tax returns, they could use that information to open new accounts in your name.
Another reason to shred documents is to protect your privacy. If you’re throwing away old utility bills or pay stubs, you don’t want anyone going through your trash and seeing that information.
Finally, after sorting what receipts to keep for taxes, you’ll probably have a pile of old papers around, so shredding all documents you don’t need can help you declutter your home or office. ConclusionKnowing exactly how long you need to keep tax returns and bank statements can help you avoid any financial document-related issues down the road. In addition, knowing when it’s time to shred them can help you stay organized, as well as protect yourself from any inconveniences, such as identity theft, card fraud, etc. How long should I keep credit card statements?According to the IRS, it generally audits returns filed within the past three years. But it usually doesn't go back more than the past six years. Either way, it can be a good idea to keep any credit card statements with proof of deductions for six years after you file your tax return.
Do banks keep records longer than 7 years?1 Bank statements of the past year should be kept for tax-filing purposes, but you may also need them to get a loan or rent a home. Banks are required by federal law to keep most records on file for at least five years, and many keep members' account statements available for up to seven.
How long should you keep utility bills and bank statements?Utility Bills: Hold on to them for a maximum of one year. Tax Returns and Tax Receipts: Just like tax-related credit card statements, keep these on file for at least three years. House and Car Insurance Policies: Shred the old ones when you receive new policies.
|