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WHEN TO KEEP, AND WHEN TO THROW AWAY, FINANCIAL DOCUMENTS

 

RECEIPTS:  Keep receipts for anything you might itemize on your tax return for three years.

HOME IMPROVEMENT RECORDS:  Hold for at least three years after the due date of the tax return that includes the income or loss on the home when it’s sold.  If you plan to sell the house, and you have made improvements, keep receipts for those improvements for seven years to lower the taxable gain tax when you sell it.

MEDICAL BILLS:  Keep receipts for medical expenses for one year as your insurance company may request proof of a doctor visit or other verification of medical claims.  Beginning January 1, 2019, you can only deduct total unreimbursed allowable medical care expenses that exceed 10% of your adjusted gross income.  If you take that deduction, you will need to keep those medical records for three years.

PAYCHECK STUBS:  Keep pay check stubs until the end of the year and discard after comparing to your W-2 and annual Social Security statements.

UTILITY BILLS:  Keep for one year - or three years if claiming a home office tax deduction.

CREDIT CARD STATEMENTS:  Keep until you have confirmed the charges and have proof of payment.  If needed for tax deductions, keep for three years.

INVESTMENT AND REAL ESTATE RECORDS:  Keep for three years, as you may need documentation for the capital gains tax if audited by the IRS.  These records track your cost basis and the taxes you owe when you sell stocks or properties.  After receiving annual statements, shred your monthly statements.

BANK STATEMENTS:  Keep bank statements for three years in case you are audited by the IRS.

TAX RETURNS:  The IRS recommends you “keep records for three years from the date you filed your original return or two years from the date you paid the tax, whichever is later.”  If you file a claim for a loss from worthless securities or take a bad debt deduction, keep your tax records for seven years.

RECORDS OF LOANS THAT HAVE BEEN PAID OFF:  Keep for seven years.

ACTIVE CONTRACTS, INSURANCE DOCUMENTS, PROPERTY RECORDS OR STOCK CERTIFICATES:  Keep these items while active.  After contracts are completed, or insurance policies expire, discard these documents.

MARRIAGE LICENSE, BIRTH CERTIFICATES, WILLS, ADOPTION PAPERS, DEATH CERTIFICATES OR RECORDS OF PAID MORTGAGES:  Keep these documents forever.