Have you ever wondered when it was safe to throw out those important documents? Well, we’ve got the answers right here. Keep reading to find out how long to hang on to your important records.
10. Personal Records
Personal records include things like birth certificates, marriage licenses, death certificates, adoption papers, Social Security cards, citizenship and naturalization papers, Veteran’s benefits, child support awards, passports, patents, and copyrights. Most of these items should be kept forever, for various reasons, including identification, references for family members, ownership rights, and documentation as needed. While you should keep your passport for as long as you live, you should also remember that it needs to be updated every ten years.
9. Health Records
It’s important to hang on to not only your health records, but those of your family members as well. For example, you’ll need those immunizations for school admission (for you and/or your kids) and to get a passport. Plus, it’s good for your relatives to know a little about their family medical history. Not to mention that “if you become ill, well-organized paperwork will make it easier for your loved ones to find your healthcare power of attorney, insurance policies, medical records, and outstanding bills,” according to Consumer Reports. So, just how long should you hang on to these documents? Permanently.
Oh, and don’t forget about your pets. You’ll need to hang on to their health and immunizations records as well, for as long as they live or for as long as you retain ownership–whichever comes first.
If you’ve got utility bills–or any other household bills for that matter–lying around, you might not want to get rid of them just yet. At least not until you have verified that the payment has indeed been received. After that, you can toss them. But, not in the garbage. Shred them instead, or delete them if they’re on your computer. The last thing you want is someone accessing your information and stealing your identity.
NOTE: You should hang on to your most recent utility bill from your old address if you’ve moved, according to Clark.com, the website of popular consumer expert Clark Howard.
7. Bank Records
When it comes to bank statements and deposit slips, money expert Clark Howard recommends keeping them for either a month, a quarter, or a year. In other words, you should hang on to your bank deposits slips until you reconcile your statements. As for your bank statements, you should keep them for the entire year and perhaps store them with your tax returns if you can use them for deductions. Some experts recommend keeping your banks statements for two years or more. As for ATM receipts, Business Insider says they can be tossed after a month. Again, don’t forget to toss them in the shredder, not the trash.
6. Housing Records
This includes not only your deeds, mortgage documents and home insurance, but rental records as well, such as a copy of your lease agreement and pictures showing the condition the rental property was in when you moved in.
Your home mortgage documents and major home improvement receipts should be kept forever. According to Clark Howard, your home improvement receipts “can lower your capital gains tax when you go to sell.” Plus, “disputes about balances have been known to arise when ownership of the mortgage note changes hands,” so make sure you hang on to those mortgage payment checks for as long as you need to, Howard added.
5. Tax Records
According to the IRS, “the length of time you should keep a document depends on the action, expense, or event which the document records. Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out.”
In general, you should keep tax return preparation documents such as 1099 statements, W-2s, charitable contribution receipts and all documentation for any deductions for at least seven years. You should keep your tax returns indefinitely.
Here are some examples of special circumstances:
-If you file a claim for credit or refund after you file your return, keep your records for three years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later.
-If you file a claim for a loss from worthless securities or bad debt deduction, keep your records for seven years.
-Keep your records for six years if you do not report income that you should report, and it is more than 25 percent of the gross income shown on your return.
-Keep your records indefinitely if you do not file a return or if you file a fraudulent return.
4. Business Records
Unlike individuals, businesses can’t just throw away files all willy-nilly. Even if they’re old, the law might forbid you from tossing them out. “Depending on the type of file and the relevant laws, you might have to keep them anywhere from one year to three years to forever,” the Houston Chronicle said in an article on its website.
According to the newspaper, the IRS recommends businesses keep most tax-related records for three years. Keep in mind, however, that state tax laws may be a little different. Depending on where you live, you might be required to hold on to tax records for more than three years.
If you work in a medical setting, your office may be required to keep patient medical files for a certain number of years, or at least until the patient switches doctors. For children, the medical facility is required to keep their files on hand until they become legal adults.
Insurance files also need to be kept for a certain number of years, as do personnel files. According to the Houston Chronicle, personnel files need to be kept for one year, while payroll records should be kept for three years.
Wills and all related documents, including trust documents, letters of last instructions, medical directives (living wills), durable power of attorney, durable power of attorney for healthcare, and burial lot deeds should be kept permanently and updated as needed. This lets your family know what to do or how to care for you in the event of you come down with a debilitating disease or in the event of your untimely demise. Plus, depending on the type of document, it can also show proof of ownership.
2. Employment and Retirement Records
Your employee benefit information such as your annual IRS form W-2, Social Security, and retirement contributions and benefits, and even records documenting your work history should be kept anywhere from six years to forever. Other documents important to your employment that should be kept forever include diplomas, professional certificates, professional licenses, and transcripts.
Pension records from former employers should also be kept indefinitely. Retirement plan statements should be kept quarterly until you receive your year-end statement. Keep paper or digital copies of annual statements for at least seven years after you retire or close the account.
1. Property Records
Records documenting property appraisals, easements, and mineral and surface leases should be kept anywhere from three to six years to indefinitely. They can provide you with proof of payment, can aid in tax preparation, and are useful for future reference. When it comes to your vehicles, you should hang on to the titles and bills of sale until the vehicles are sold to someone else. And, for tax records connected to property, hang on to those until the period of limitations expires for the year in which you dispose of the property. These records will help “figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property,” the IRS says.
Equally important to hanging on to your documents for the right amount of time is keeping them in a safe place. Consider investing in a fireproof safe or a safe deposit box. Or, if you have important records stored on your computer, make sure they’re stored in password-protected files.