It’s hard to believe that it’s already time to start going through piles of records and getting your documents in order for tax season. If you’re like me, going through this process reminds me of how much I hate to see stacks of paper and has me dreaming of a nice, neat desk! Here is a concise list to help you determine what to keep and what to shred as you get organized this year:
Bank Statements: Keep one year unless needed for tax records.
Cancelled Checks: Keep one year unless needed for tax records.
Charitable Contributions: Keep with applicable tax return.
Credit Purchase Receipts: Discard after purchase appears on credit card statement if not needed for warranties, merchandise returns or taxes.
Credit Card Statements: Discard after payment appears on credit card statement.
Employee Business Expense Records: Keep with applicable tax return.
Health Insurance Policies: Keep until policy expires, lapses or is replaced.
Home & Property Insurance: Keep until policy expires, lapses or is replaced.
Income Tax Return and Records: Permanently.
Investment Annual Statements and 1099's: Keep with applicable tax return.
Investment Sale and Purchase Confirmation Records: Dispose of sale confirmation records when the transactions are correctly reflected on the monthly statement. Keep purchase confirmation records 3-6 years after investment is sold as evidence of cost.
Life Insurance: Keep until there is no chance of reinstatement. Premium receipts may be discarded when notices reflect payment.
Medical Records: Permanently.
Medical Expense Records: Keep with applicable tax return if deducted on tax return.
Military Papers: Permanently (may be required for possible veteran's benefits).
Individual Retirement Account Records: Permanently.
Passports: Until expiration.
Pay Stubs: One year. Discard all but final, cumulative pay stubs for the year.
Personal Certificates (Birth/Death, Marriage/Divorce, Religious Ceremonies): Permanently.
Real Estate Documents: Keep three to six years after property has been disposed of and taxes have been paid.
Residential Records (Copies of purchase related documents, annual mortgage statements, receipts for improvements and copies of rental leases/receipts.): Indefinitely.
Retirement Plan Statements: Three to six years. Keep year end statements permanently.
Warranties and Receipts: Discard warranties when they are clearly expired. Use your judgment when discarding receipts.
Will, Trust, Durable Powers of Attorney: Keep current documents permanently.
My best advice? Print this list and keep it with your tax records to revisit each tax year. And call your financial planner if you have any questions about what you need to keep.
Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012-2014 Sandy has been named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.
Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.
This list may not be a complete description of the documents available for shredding or their retention requirements. You should discuss any tax matters with the appropriate professional.