Since the taxes are done and the IRS has already cashed my check (funny how quick they are at that!), it’s time to throw away some of the paperwork that I’ve accumulated through the year. I usually keep all my pay stubs, bills, and other papers in their own folders in a creaky filing cabinet. By this time of year, I can barely open the drawer anymore. But how long should you really keep your papers?
I got this list from a Fidelity newsletter I received a few years ago. Not sure how accurate it all is, but it seems like a good general guideline:
Income tax returns
Home purchase records
Home improvement receipts
Any active insurance policies
Keep at least 3 years
Anything that you need to back up your income tax return, like W-2s, 1099s, receipts, or investment statements.
I believe this is because the statute of limitations for IRS audits is three years from each April 15th or when you file your return, whichever is later. Note that if you underreport your income by 25% or more, then the statute of limitations is extended to 6 years. Finally, if there is fraud involved, then there is no time limit.
Throw away at year-end
Monthly bank statement
Monthly or quarterly investment statements
Throw away after a month
ATM or credit card receipts
Credit card statements
A big caveat to all this is to keep anything that you might need for insurance or warranty purposes, in addition to the tax-related items already mentioned earlier. Saving receipts saved me from replacing a DVD player before, back when they still cost over $100. Also, save anything that you may need to prove your cost-basis for an investment when you eventually sell. Of course, be sure to shred everything you decide to dump.
I’ve been contemplating scanning all my stuff in as well, but I don’t think I’m quite that organized just yet.