How long should you keep important documents?
Knowing which documents to keep—and how to store them—can help you protect your personal information
Read, 3 minutes
As your financial life gets more complicated, it’s difficult to know how long to keep documents and when it’s safe to get rid of them. Some things you’ll need to hold on to for your whole life and others for just a few months. You probably already know that important documents such as tax returns, bank statements and paycheck stubs need special attention, but for how long, and in what format? And what is the best way to safeguard all that personal data? Here’s a quick list of financial documents to save, based on the time they should be kept.
Tax returns, major financial records
Your tax returns are important documents to keep as part of your financial history. You’ll want to keep a permanent electronic or hard copy of each year’s tax return and any payments you make to the government. Additionally, it’s a good idea to hold on to records of major financial events, such as legal filings or inheritances. You can easily access your paperless statements and documents online and keep them safely stored there.
Additional documents to keep forever
Birth and death certificates
Social Security cards
Military discharge documents
Life insurance policies
Wills and living wills
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KEEP 3 TO 7 YEARS
Supporting tax documentation
Depending on your filing circumstances, the IRS may be able to ask you for supporting documentation for three to seven years after you file a return. Knowing that, a good rule of thumb is to save any document that verifies information on your tax return—including Forms W-2 and 1099, bank and brokerage statements, tuition payments and charitable donation receipts—for three to seven years.
Even if your records are no longer needed for tax purposes, you may want to verify that the documents aren’t needed for other important financial institutions. Your insurance company or a creditor may have different record-keeping requirements than the IRS.
KEEP 1 YEAR
Regular statements, pay stubs
Keep either a digital or hard copy of your monthly bank and credit card statements for the last year. It’s a good idea to keep your digital copies stored online if you choose to go paperless. You should also hold on to pay stubs so that you can use them to verify the accuracy of your Form W-2 when tax season arrives.
KEEP A MONTH
Utility bills, deposits and withdrawal records
If you’re self-employed, you may need your utility, cable and cell phone bills for tax purposes. Otherwise, you can dispose of them as soon as you verify your payment was processed. You can also dispose of bank withdrawal and deposit slips after verifying them with your monthly statement.
3 ways to keep your documents secure
It’s important to make sure your sensitive information is safe and accessible.
Safeguard your information
For physical documents, designate a safe, out-of-the-way place in your home to store all paper records that protects them from damage or theft. For digital records, be sure to archive and back up all electronic records. It’s a good idea for these records to be password protected.
Guard your financial accounts
Use complex passwords to keep your account information safe. Make sure your username and password combination is different from the ones you use for personal email, online merchants and social media accounts. Protecting your computer with antivirus software is also a good idea.
Properly dispose of paper documents
You’ll put yourself at risk of fraud or identity theft if you simply throw away private documents, such as financial statements. Invest in a cross-cut shredder that will eliminate all traces of your personal information, or search for free shredding events in your community. Also consider having paperless statements and documents, which can help reduce the risk of identity theft posed by lost or stolen mail.
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