Ever wonder how long you should keep important documents such as old tax returns, mortgage documents, and home appliance receipts? Here’s a list of what to keep and when it’s safe to shred.
- Tax records. The IRS advises keeping tax returns and supporting documentation for at least three years — and up to seven years, depending on circumstances.
- House-related documents. You must keep closing documents on your home for three years following the filing of federal income taxes reflecting the purchase. However, it is best to maintain all closing records for the life of the home or until it is sold plus three years after taxes are filed reflecting that sale. Keep receipts for home improvements indefinitely to establish your basis value in the house should you sell or the house passes to heirs. Keep homeowner insurance policies as long as they are in force.
- Car-related documents. Keep car titles until you sell or trade in the vehicle. Keep the most recent proof of insurance until receipt of new documents.
- Employer pay statements. Save pay stubs until late January of the following year when you receive your W-2 forms. After verifying that the numbers on your W-2 are correct, you are safe to destroy the weekly statements.
- Insurance policies. Retain as long as the policy is in force.
- Investments. Keep documents on the original purchase of stocks, bonds, mutual funds and annuities to document your purchase price, called your basis. Later, when you sell, you’ll need that information to figure capital gain or loss.
- Bank and credit card statements. Retain for one year unless they’re needed to support tax returns. If so, keep for three to seven years, depending on circumstances. (See above).
- Receipts for expensive items. Bills of sale for electronic equipment, jewelry, and similar items should be kept indefinitely to help prove value for an insurance claim should they be stolen or destroyed.
- Marriage, divorce, birth and death records. Permanently retain all documents related to major life events. This also includes Social Security cards, passports, wills, and other estate-planning documents.
- Auto and other consumer loans. Documents pertaining to consumer loans should be kept until the loan is paid off and you’ve received notice from the lender that the loan has been satisfied. Retain loan satisfaction notice for three years.
- Utility statements. Bills of this type can be trashed once you have received the next bill, noting that the previous month has been paid. Exception: If needed for tax purposes, retain for at least three years. (See above).
- Product Warranties. Save as long as you own the item and/or as long as the warranty is in effect.
Documents that need to be kept forever or are difficult to replace, such as passports and Social Security cards, wills and life insurance policies, should be kept in a fireproof lockbox. Everything else can be stored in a file box. Never discard passports, Social Security cards, driver’s licenses or papers containing financial account numbers. Use a cross-cut shredder to destroy.
