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Financial Documents to Save and what You Can Safely Throw Away

Do you feel a little overwhelmed by all the paper that enters your home?

From mail to receipts to financial documents, keeping everything organized can feel like a full-time job. What do you really need to save and what can you toss to the curb with the weekly recycling?

The main reason for saving and filing financial documents is to be able to defend your annual tax returns if needed, but there are other reasons to save paperwork too. Here’s my quick guide to what to do with your financial documents: how long you need to save the important ones, how to store the documents you do keep, and how to safely dispose of the rest.

Seven Years or Longer

Keep any tax records for at least seven years. If you ever face a tax audit, then you’ll have all the information you need. The IRS statute of limitations for auditing is three years. In some instances and circumstances, they can go back as far as 6-7 years. Check with a tax professional on the limitations in your state.

Also save tax verification documents such as:

  • W-2 and 1099 forms

  • Receipts and payments

  • Receipts related to assets as long as you're the owner (ie. home remodeling projects)

Three to Seven Years

Keep supporting documentation for 3-7 years after you file a return. This includes any document that verifies information on your tax return.

Including:

  • W-2 and 1099 forms

  • Bank and brokerage statements

  • Tuition payments

  • Charitable donation receipts

One Year

Keep documented records on hand for a year if you need them to support your current-year tax preparation or as proof of income when making a large purchase.

Documents that fall into this category include:

  • Non-tax-related bank and credit card statements

  • Investment statements

  • Pay stubs

  • Receipts for large purchases.

  • Medical bills if unresolved insurance disputes*

Less than One Year

You can get rid of most monthly bills after you pay them, or after the payments have been credited to your bank statement. If you end up needing to go back to verify anything, you can usually access past bills online.

Don’t worry about keeping receipts unless they pertain to:

  • Products under warranty

  • Your tax returns

  • Insurance claims

Important Papers to Save Forever

  • Birth certificates

  • Social Security cards

  • Marriage certificates

  • Adoption papers

  • Death certificates

  • Passports

  • Wills and living wills

  • Powers of attorney

  • Legal filings

  • Military records

  • Retirement and pension plans

  • Inheritance documents

  • Beneficiary forms

Need help keeping it all organized? Want to know the best way to store documents both digitally or hard copy? I can help!

I help business owners with all of these questions and more, helping them reclaim their time and take control of the management of their finances.

I offer a variety of small business bookkeeping services, payroll processing, and employee benefit administration.


*Note on medical bills: The Federal Trade Commission suggests holding on to your paid medical bills for a year. Then they're safe to dispose of, pending no unresolved insurance disputes. Having records on hand to dispute payments or errors is wise.

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