Well, it’s a new year and with the new year comes time to purge, archive and shred old files – yay purging! It’s also time to get ready for taxes, which I know just tickles you to the tips of your toes, right? (That was dry sarcasm, for those of you not familiar with my wittiness. 😉

So…what records exactly do we have to keep and for how long? Here is an easy breakdown from Consumer Reports article, How long to keep tax records and other documents:

You have 4 categories of documents:

Keep Less than 1 Year

  • ATM, bank deposit and credit card receipts:  Compare with your monthly statements then shred to avoid ID theft.
  • Electronic files:  Securely trash unless you need them for tax return support.
  • Insurance policies and investment statements:  Until new ones arrive.

Keep 1 Year or More

  • Loan documents:  Until paid off. Toss after.
  • Vehicle titles:  Until sold. Title goes with new owner.
  • Investment purchase confirmations:  Until sold so you can establish cost basis and holding period (if these appear on annual statements, keep just the annuals).

Keep 7 Years

  • Tax records:  Electronic and paper.
  • If you fail to report more than 25% of your gross income on your tax returns, the IRS has 6 years to collect the tax or start legal proceedings.

Keep Forever

  • Birth and death certificates
  • Marriage licenses
  • Divorce decrees
  • Social security cards
  • Military discharge papers
  • Defined-benefit plan documents
  • Estate-planning documents
  • Life insurance policies
  • Inventory of bank safe-deposit box

How to Store your Files

In a Fireproof Safe or Password-Protected Electronic File:

  • Bank and investment statements
  • Estate-planning documents
  • Pension information
  • Insurance policies
  • Pay stubs
  • Tax documents
  • Safe-deposit box inventory list

In a Safe-deposit Box:

Get this at a bank near you. Approximately $50-60 annual cost. Well worth it as if you ever lose any of these documents, the cost and sheer headache to replace them is easily worth the annual fee.

  • Original birth and death certificates
  • Social security cards
  • Passports
  • Life insurance documents
  • Marriage and divorce decrees
  • Military discharge information
  • Vehicle titles
  • Inventory of home contents
  • Loan documents