If you are busy tossing things as you prepare to move and are trying to decide what financial records you should keep and what you can shred you may find this timeline from Bankrate.com useful.

FINANCIAL RECORDS TIMELINE

  • Taxes – seven years
  • Returns – the IRS has three years from your filing date to audit your return if it suspects good faith errors
  • Canceled checks/receipts (alimony, charitable contributions, mortgage interest and retirement plan contributions) – the three-year deadline also applies if you discover a mistake in your return and decide to file an amended return to claim a refund
  • Records for tax deductions taken– the IRS has six years to challenge your return if it thinks you under-reported your gross income by 25 percent or more; there is no time limit if you failed to file your return or filed a fraudulent return
  • IRA contributions – permanently; if you made a non-deductible contribution to an IRA, keep the records indefinitely to prove that you already paid tax on this money when the time comes to withdraw
  • Retirement/savings plan statements – from one year to permanently; keep the quarterly statements from your 401(k) or other plans until you receive the annual summary then shred the quarterlies if everything matches up; keep the annual summaries until you retire or close the account
  • Bank records– from one year to permanently; go through your checks each year and keep those related to your taxes, business expenses, home improvements and mortgage payments; shred those that have no long-term importance
  • Brokerage statements – until you sell the securities; you need the purchase/sales slips from your brokerage or mutual fund to prove whether you have capital gains or losses at tax time
  • Bills – from one year to permanently; go through your bills once a year; in most cases, when the canceled check from a paid bill has been returned, you can shred the bill; however, bills for big purchases such as jewelry, rugs, appliances, antiques, cars, collectibles, furniture, computers, etc should be kept in an insurance file for proof of their value in the event of loss or damage
  • Credit card receipts and statements – from 45 days to seven years; keep your original receipts until you get your monthly statement, then shred the receipts if the two match up; keep the statements for seven years if tax-related expenses are documents
  • Paycheck stubs – one year; when you receive your annual W-2 form from your employer, make sure the information on your stubs matches; if it does, shred the stubs; if it doesn't, demand a corrected form, known as a W-2c
  • House/condominium records– from six years to permanently; keep all records documenting the purchase price and cost of all permanent iimprovements, such as remodeling, additions and installations; keep records of expenses incurred in selling and buying the property, such as legal fees and your real estate agent's commission, for six years after you sell your home; holding on to these records is important because any improvements you make on your houses, as well as expenses in selling it, are added to the original purchase price or cost basis; this adds up to a great profit (also known as capital gains) when you sell your house; therefore you lower your capital gains tax

Source: Marquette National Bank and Catherine Williams, President of Consumer Credit Counseling Services of Greater Chicago

Jeri Pischke, Tender Heart Transitions – EmailWebsite

About Sharlene Hensrud

I love what I do! Highly insightful, analytical and creative, there is nothing I love more than helping you find the right solution for your real estate transition. My mission is to serve my clients with honesty and integrity, exceeding their expectations in service and support… and to help others by donating a portion of every transaction to Habitat for Humanity

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7 thoughts on “How long should you keep financial records?

  1. checks each year and keep those related to your taxes, business expenses, home improvements and mortgage payments; shred those that have no long-term importance

  2. Thanks for the great list. I do most of them like keeping the receipts for big purchases and bills one year and up. I would definitely add those you’ve mentioned and I realized that it would be greatly beneficial.

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