Well, it’s a new year and with the new year comes time to purge, archive and shred old files ‚Äď 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. ūüėČ

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