How long should you keep payment records, bank statements, tax forms and the rest of that junk?: Money Matters
on May 31, 2013 at 5:00 PM
My wife and I are cleaning out the home office and disagree on how much of our personal paperwork we can purge. We have cabinet drawers and boxes full of stuff. What can we safely get rid of?
Rather than say you should keep this kind of statement for this long and that kind of record for that long, here's my simple advice: You should keep either paper or electronic records showing:
* What you've paid.
* How much money you have.
* Major purchases under warranty.
* The logic you've used to prepare your taxes.
Under the category of what you've paid: This doesn't mean you need to keep a copy of every check you've ever written. But you should be able to get your hands on your most recent statement for every type of account - mortgage, cell phone bill, credit card, etc. - to show your most recent payment and balance. When you get a new statement, throw out the previous one.
You also might want to make sure you either have or can access past statements such as your cable bill or electric bill. Maybe keep one per year. This could be helpful if you're trying to look at the cable package you used to have or what your electric bill was before you bought the new air conditioning system.
This also means that you should keep proof of final payments going back about 20 years, if we're talking about an account or loan or debt that you paid off.
Under the categories of what you own and how much money you have: This means all property records, car titles, savings bonds, etc., and the most recent statements for all bank, investment and college-saving accounts.
Finally, under taxes: The statute of limitations for an income tax audit is seven years. However, there is no statute of limitations on fraud investigations. I'd recommend keeping any major records relating to tax preparation forever, including the cost basis of any stocks involved.
Do you have any suggestions on stopping non-requested credit card applications being mailed to our home? I've considered mailing back using prepaid postage envelope.
It's been a long, long time since I've gotten this question. Years and years. After the financial crisis, credit tightened up so much with companies reducing credit lines and involuntarily closing people's accounts that it was difficult to imagine when that might change.
So I'll take this as a positive economic sign.
You can opt out of having your contact information sold by the credit bureaus to credit card and insurance companies. You can choose to stop receiving pre-screened offers for five years or you can choose to stop receiving them forever.
You can opt out of receiving them for five years or opt out of receiving them permanently.
* To opt out for five years: Call toll-free 1-888-5-OPT-OUT (1-888-567-8688) or go to www.optoutprescreen.com. The phone number and web site are operated by the major credit bureaus.
* To opt out permanently: You can start your request by going to www.optoutprescreen.com. To complete your request, you must send in the signed "permanent opt-out election form" that will be provided after you make the request online.
Whether you call or go online, you'll be asked to provide personal information, including your name, Social Security number, your home telephone number and date of birth. Don't worry about providing this, as long as you're calling the official number or going to the official site. The credit bureaus already have this information.
If you don't have online access, you can send a written request to permanently opt out to each of the major consumer reporting companies. They're listed below. Make sure your request includes your name, address, Social Security number, your home telephone number and date of birth.
how long should i keep my credit card statements
Every year, it’s nice to do a bit of “financial spring cleaning” and declutter your filing cabinet, your desk drawers, and the various hiding places where miscellaneous scraps of paper tend to accumulate and multiply. Read on to find out what you should be saving, and what’s OK to shred.
If you’re long overdue for some organization in the paperwork department, start here! This category includes all the super-important life stuff that’s usually issued to you only once (and therefore is total pain to replace):
Birth and death certificates
Social Security cards and ID cards (even expired versions)
Passports (even expired versions)
Marriage licenses and divorce decrees
Copies of wills, trusts, and powers of attorney
Records of paid mortgages
Safe-deposit box inventory
Your “keep forever” documents should be kept in a secure place. A locking file cabinet in your home is a popular choice, but consider upgrading to a safer alternative, such as a fireproof safe in your home or a safe-deposit box at your credit union or bank. Also consider scanning these documents and having them backed up on the cloud (and password protected, of course) so that you can access them remotely and quickly in an emergency.
This category includes all supporting documents for your income tax return, plus a couple of other odds and ends. This may seem like a long period of time, but it’s not an arbitrary number—7 years is how far back the IRS can go to audit a tax return. The breakdown is a little more complex than that: you can be audited for any reason up to 3 years after you file a tax return, and up to 6 years after you file a tax return if you omitted 25% or more of your gross income—which technically makes the auditing window more like 3 to 7 years. We wanted this guide to be thorough, so we’re sticking with 7 years as a recommendation!
An audit is an evaluation of your tax return to verify its accuracy and to ensure compliance with tax laws. Many people associate being audited with having committed tax fraud or some other shady financial behavior but, in fact, a number of taxpayers are audited on a random basis each year. If audited, you are required by law to provide the documentation that supports the claims made in your tax return. In some cases, additional information may be required in order to verify a claim you’ve made—it might just be a matter of providing a canceled check, a receipt or a bank statement. In other instances, the audit may take place on-site (meaning at your residence or workplace) or at an IRS office. Being well-organized is the best way to make the process as quick and painless as possible.
So, what sorts of documents should you hold onto for 7 years?
Any forms that support income or a deduction on your tax return (e.g., receipts, canceled checks, W-2 forms)
Records of selling a house or stock (documentation for capital gains tax)
Records of sold investments
Medical records (including bills, prescriptions and health insurance information)
Quarterly investment statements
Shred credit card statements after 45 days, but hang onto those statements that you may need for business, for taxes, as proof of purchase, or for insurance.
KEEP FOR 30 DAYS OR LESS
ATM slips can be tossed once you’ve checked them against your monthly bank statement. Utility bills and phone bills can be shredded after you’ve paid them, unless they contain tax-deductible expenses.
This bonus category is a catch-all for agreements and contracts that are active for varied amounts of time:
Vehicle titles and loan documents
House and mortgage documents
Pension records/retirement plans
You’ll want to hang onto the records in this category for at least as long as you own the asset. For major purchases, stapling the original purchase receipt to the user manual or warranty information will keep everything in the same spot, should you need to make a warranty claim. Documents relating to improvements and upgrades on your home or vehicle should also be saved alongside your title and loan papers.
Sorting through financial documents is a pretty straightforward process once you figure out how long you need to hang onto specific types of documents. Doing a periodic cleanup will save you time and hassle in the long run, and will keep your desk drawers and filing cabinets clutter-free in the meantime!