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Shred It Up: Which Financial Docs Can Go Now
May 26th, 2009 by Katie McCaskey
say it with a shredder
Image by osmium via Flickr

By MainStreet.com Staff Writers

Knowing how long to keep an important financial document is the key to maintaining your personal security as well as managing clutter. Some documents can be shredded after short periods of time, while others should be kept indefinitely. Here’s a handy guide to help you figure out what to keep and what to shred, beginning with the short-lived documents:

Keep for 45 Days

  • Credit card receipts. Once the bill comes, you can shred these unless they will be deducted at the end of the tax year.

    • Keep for One Year

  • Non-permanent bank records such as retail, utility and personal expenses that are not tax-deductible.
  • Brokerage statements from active securities to show capital gains and/or losses at tax time.
  • Utility, credit card and other bills can be shredded after one year for anything except large purchases.

    • Keep for Seven Years

  • Tax documents, including tax returns, canceled checks, receipts and records for tax-deductible items like alimony, charitable contributions, mortgage and student loan interest, retirement plan contributions, etc. NOTE: The IRS has three years from the date you filed to audit your returns if they suspect errors. You also have three years to amend your tax returns if you find an error on your part or receive additional documentation. The IRS also has six years to challenge your return if you underreport your gross income by more than 25 percent, so be sure to keep all W-2s, 1099s and other income reporting paperwork.
  • Credit card statements
  • Housing purchase documents and related paperwork

    • Keep Permanently

  • IRA contributions. These are vital because you may need to prove the amount of your contributions when it comes time to withdraw funds at retirement age.
  • Retirement/savings plan statements. To save space, you can keep the yearly statements for each account and shred the quarterlies at the end of each year after you’ve verified the annual reports.
  • Bank records for important expenses, such as those related to taxes, home improvements, business expenses, and mortgage payments.

    • Shred Now

  • Closed retirement, savings, checking or other financial accounts with a zero balance.
  • Receipts from non tax-deductible items like groceries, most retail purchases, etc.
  • Tax documents more than seven years old.

    • Conditional Documents (Times Vary)

  • Brokerage statements can be shredded when the corresponding securities are sold or accounts are closed.
  • Bills for large purchases such as jewelry, appliances, antiques, cars, furniture, computers, collectibles and other investment pieces should be kept until the item is sold or no longer in your possession.
  • Medical records should be kept as long as necessary, given your current health circumstances. You probably don’t need to keep a report of your chicken pox doctor visit from third grade, but an abbreviated lifelong record of immunizations and illnesses can prove to be quite useful for many doctors. You may consider scanning these documents and storing them digitally to save space.
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    This entry was posted on Tuesday, May 26th, 2009 at 9:00 am and is filed under Life. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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