Spring Cleaning Your Financial Documents

By Tracy Faust

It’s difficult to know how long to keep documents and when it’s safe to get rid of them. Some things you’ll need to hold on to for your whole life and others just a few months. You probably already know that important documents such as tax returns, and bank statements need special attention, but for how long?

1. Store permanently: You will want to hold onto records of major financial events such as legal filings or inheritances. Your tax returns are important documents to keep as part of your financial history so you will want to keep a permanent electronic or hard copy of each year’s tax return including W2 forms and any payments you make to the government.

2. Keep for 3-7 years - support tax documentation: Depending on your filing circumstances, the IRS may be able to ask you for supporting documentation for three to seven years after you file a return. Knowing that, a good rule of thumb is to save any document that verifies information on your tax return- including Forms 1099, bank and brokerage statements, tuition payments, and charitable donation receipts.

3. Store for 1 year - regular statements, pay stubs: Keep either digital or hard copy of the past year’s worth of your monthly bank and credit card statements. You should also hold on to pay stubs so that you can use them to verify the accuracy of your Form W-2.

4. Keep for 1 month - utility bills, deposit and withdrawal records: If you’re self-employed, you may need your utility, cable and cell phone bills to tax purposes. Otherwise, you can dispose of them as soon as you verify your payment was processed. You can also dispose of bank withdrawal and deposit slips after verifying them with your monthly statement.

Now that you know what to keep and what to dispose, how should you properly dispose of your paper documents?

You will put yourself at identity theft or risk of fraud if you simple throw away a large pile of private documents. It is best to invest in a shredder that will eliminate all traces of your personal information or search for a free shredding event.

Now you can start in your spring cleaning of the filing cabinet. Happy Spring Cleaning!

Tracy Faust | Supervisor
TFaust@MHCScpa.com