With tax season just around the bend, you’ll probably be wondering how long you should retain certain documents. So, here’s a little primer.
When you no longer require any of the documents listed below, make sure to properly dispose of them by shredding to protect personal informationcontact local credit union to inquire about their next shred event.
Credit card receipts and statements, as well as pay stubs, should be preserved for at least a year.
Keep receipts and statements to compare to your monthly statements; if they’re correct, trash the receipts. Keep receipts if you’re disputing a charge, covering a warranty, or maybe returning an item, for example.
When it comes to pay stubs, double-check that they match your annual W-2 before shredding them. Notify your employer if the information is incorrect.
Statements from retirement and savings plans, credit card records, and bills should all be preserved for at least a year.
Keep your quarterly retirement/savings statements until your annual summary arrives. Shred the quarterly statements if your yearly summary is correct; otherwise, save annual statements until you retire or close an account.
At the end of the year, go over your credit card statements. Taxes, business costs, and housing or mortgage payments should all be kept on file.
Bills for big purchases, such as vehicles, jewels, furniture, computers, and so on, should be maintained indefinitely or until sold to show proof of value in the event of loss. Other bills should be maintained until they have cleared your account or until the return and refund time has passed, after which they should be shredded.
Household data, tax records, IRA contributions, and other records should be retained for at least 6 years, if not indefinitely.
House records should be preserved for the duration of ownership, including purchase price information and the expenditures of renovations to your house, such as remodeling. Also, retain records of legal fees for six years after you sell your home if you acquire or sell property.
The IRS has three years to audit your returns, and you have three years to amend a return if you make a mistake. If you underreported gross income by 25% or more, the IRS has six years to challenge you.
Records of IRA contributions should be retained for a long time in case you need to prove you paid taxes on money you remove.
Birth and death certificates, marriage licenses, divorce documents, military paperwork, insurance claims, accident reports and claims, proof of ownership and large debt repayment, and legal correspondence should all be kept permanently.
Do I need to keep old brokerage statements?
Hold on to quarterly brokerage statements until you have the annual summary in hand, suggests McBride, to make sure they line up. It’s also a good idea to maintain track of your securities purchases and transactions in case you need to verify capital gains or losses at tax time. Remember that once you’ve claimed anything on your taxes, you should keep it for seven years just in case.
How long should you keep old brokerage statements?
Knowing this, it’s a good idea to keep any document that validates information on your tax return for three to seven years, including Forms W2 and 1099, bank and brokerage records, tuition payments, and charity donation receipts.
How many years should you keep 401k statements?
In general, 401k plan records must be retained for at least six years following the filing date of the IRS Form 5500 generated from those documents. Records required for a participant’s claim for plan benefits, on the other hand, must be preserved for a longer period of time.
What records need to be kept for 7 years?
- If scenarios (4), (5), and (6) do not apply to you, keep records for three years.
- If you file a claim for credit or refund after filing your return, keep records for 3 years from the date you filed your original return or 2 years from the day you paid the tax, whichever comes first.
- If you file a claim for a loss from worthless securities or a bad debt deduction, keep documents for seven years.
- If you do not report money that you should have reported and it is more than 25% of the gross income shown on your return, keep records for six years.
- Keep employment tax records for at least four years after the tax is due or paid, whichever occurs first.
When deciding whether to keep or discard a document, ask yourself the following questions.
How long should you keep Fidelity statements?
Even so, it’s recommended not to rely only on online records because banks, brokerage firms, and mutual fund providers can merge, go out of business, or change their data rules. Fidelity Investments maintains statements for nine years, trade confirmations for three months, and tax information for one year on its website.
How long do you need to keep stock statements?
Keep three years’ worth of year-end stock and mutual fund account statements in your tax files. You must preserve your yearly statements for six years if you are self-employed. Most taxpayers’ tax returns aren’t examined by the Internal Revenue Service until they’re three years old, or six years old if they’re self-employed. You have three years from the time you file your tax returns to revise them and claim a refund.
How long should financial statements be kept?
The majority of bank statements should be retained in paper copy or electronic form for one year before being shredded. Anything tax-related should be preserved for at least three years, including verification of charity gifts.
What papers should I keep and for how long?
According to Weltman, dividing your financial records into four categories is a smart place to start.
Keep it for no more than a year. Weltman recommends storing ATM, bank-deposit, and credit-card receipts until you reconcile them with your monthly accounts in this file. If you don’t need the paper papers or electronic data to support your tax return, shred them or securely discard them. Until fresh insurance policies and investment statements arrive, keep them.
Keep for at least a year. Keep all loan documentation until the loan is completely paid off. This is usually for a period of more than a year. Keep the title if you own a car until you sell it. Keep purchase confirmations for stocks, bonds, and mutual funds until you sell them, so you can figure out your cost basis and holding term, according to McBride.
Keep it for at least seven years. The government has six years to collect the tax or file legal action if you fail to record all of your gross income on your tax filings. To be safe, maintain all tax records for at least seven years, according to McBride.
Keep indefinitely. Birth and death certificates, marriage licenses, divorce decrees, Social Security cards, and military discharge papers should all be retained for as long as possible. Keep any defined-benefit plan documentation, estate-planning documents, life-insurance policies, and a list of what’s in your bank safe deposit box on hand as well.
How far back can the IRS audit a 401k plan?
It’s only normal to be concerned about an IRS audit, and the length of audit periods can be terrifying. Tax attorneys and accountants are accustomed to keeping track of the length of their clients’ audit exposure, and you should do the same. Keep an eye on the calendar until the audit is over. Most of the time, this will be three or six years after you file your tax return. However, even if you filed and thought everything was in order, the IRS’s authority to audit you may never expire due to the statute of limitations. The IRS can audit you for three years after you file, but there are many circumstances that allow the IRS to audit you for six years or more. If you excluded more than 25% of your revenue, for example, the three years becomes six. This 25% guideline can also be used to tax base.
Is there any reason to keep old tax returns?
To protect your Social Security or retirement payments, maintain your tax returns for as long as possible. No, that is not the case. It’s still shown as a depreciable asset on your tax return, or you disclosed the basis when you sold it.
Shred Them
Shredding is the most popular method of destroying sensitive papers. Many establishments charge a fee for paper shredding. The UPS Store, FedEx, Staples, and Office Depot are just a few of these companies. Your financial institution may shred them at times. Honor Credit Union hosts free community shred days for members and the general public each year.
Pulp Them
If you don’t want to go through the hassle of transporting your documents to another location, you can pulp them at home using a rather easy procedure called pulping. This will require a large bucket, depending on the number of documents to be destroyed, bleach, water, a power drill with a paint mixer attachment, and a tarp or screen to pour the pulp material onto to dry. After the pulp has dried, you can either dispose of it or burn it in a secure location.
Burn Them
Another easy approach to destroy documents is to set them on fire. Because they stand off the ground, have coverings, and protective grating with holes to enable air movement for a more thorough burn, fire pits are great for burning documents. It’s critical to be aware of your local burning regulations. After the fire has completely burned out, go through the ashes to see if there are any lingering items that need to be destroyed. The chilly ashes can be scattered over your yard.
Is it safe to throw away old bank statements?
Those who have never been a victim of identity theft are fortunate. In 2018, there were 444,602 reports of identity-related fraud, according to the Federal Trade Commission. In the same year, identity theft increased by 24%. Although cybercrime is on the rise, did you know that thieves can access your information much more easily than trying to hack into a company’s database? Access to your old mail, credit cards, and debit cards is all they need. Debbie Guild, chief security officer of PNC Financial Services Group, Inc., says, “Bank statements, credit card statements, and other documents that include your personal information should never be disposed of in an unsecured manner.” “You could be putting yourself at risk for identity theft by wadding up a document like a financial statement and discarding it in the trash or disposing of it in another unsecure manner.”