Financial Records: How Long Should You Keep Documents?

If the only certainties in life are death and taxes, the only certainty about adulthood is paperwork. Each year, Americans receive some combination of W2s, 1099s, and more…all to file a Form 1040 with the IRS. And that’s just taxes. Most folks have financial records that extend far beyond tax forms.

Since these documents often include important personal and financial information, it’s important to understand how long you should keep them before shredding them.

How long should you keep tax documents?

After all of the number and alphabet soup, you may be tempted to shred the paperwork and be done with it. But the IRS advises against that. Instead, they say you should:

  • Keep personal tax records for three years after you file your return, or two years after the taxes were paid, whichever date is later.
  • If you’re claiming a capital loss or take any deductions tied to bad debt, the IRS suggests you extend that period to seven years.
  • Remember: These are the rules for personal tax documents. If you own a business, there may be different guidelines for how (and how long) to store those documents.

Of course, tax documents are just one piece of the puzzle. However, much of the financial paperwork we’ll discuss now may be relevant in completing your tax return; therefore, you may want to follow the same IRS guidelines just in case you’re audited and need supporting documentation.
Still, taxes aren’t the only consideration.

How long should you keep bank statements?

It’s a good idea to keep your bank statements in case you need to dispute a charge. Look up how long the dispute period is for your particular bank or credit card account to see how long that window is. (Generally, it’s 60 days.)

Once the dispute window passes, it’s best to shred your monthly statements to avoid anyone stealing your personal information.
Keep in mind: Most bank and credit card accounts keep digital records, meaning that if you need to access the information on a statement in six months, you may be able to find and download a PDF of your statement if you’ve set up online banking.

How long should you keep retirement account paperwork?

Keep quarterly statements until you receive your annual statement.

Then, keep your annual statements until you close the account.

If you’re contributing after-tax dollars to either a 401(k) or IRA, make sure to keep records of those contributions indefinitely, as you may need to provide documentation that you paid taxes on the funds at a future date.

How long should I keep loan documents?

For houses, cars, and other assets, the general rule is to keep all documentation for as long as you own the asset. This includes paperwork tied to the physical asset (inspections, sales receipts, and so on) and anything related to financing if you borrowed money to acquire the asset.

In particular, make sure you keep (and know how to access) the following:

  • Vehicle title and registration.
  • The deed to your home or, if you’re still repaying your mortgage, details on who currently owns the deed to your home.
  • Payment records until you hit zero balance.

How long should you keep medical records?

If you experience major medical issues, such as surgeries or major illnesses, keep payment records until you have proof of a zero balance. It’s also a good idea to keep your explanation of benefits and document which codes your provider used with your insurance, and so on. Errors in medical billing aren’t uncommon, so keeping (and potentially reviewing) this paperwork may help you if any issues arise.

You may want to keep additional documentation, such as your (and your family’s) vaccination records, indefinitely.

Miscellaneous paperwork: What should you keep?

Other documents you should keep indefinitely include birth, marriage, and death certificates; divorce decrees; citizenship and military discharge papers; and Social Security cards.

Store hard copies in a safe and secure location. A bank safety deposit box can provide added security, or consider a fireproof lockbox in your home.

If you’re ready to discard sensitive documents, be sure to use a shredder to protect your personal and financial information.

If you switch to fully digital records, be sure to check how long your financial institution keeps records; some banks may only keep digital records for a certain period of time. It’s possible you’ll be able to access records beyond what you see in your online account, but that may require more time and effort than simply logging into your account.

If you have questions about your personal circumstances, or how we handle personal information or store documents at Bogart Wealth, schedule time to speak with a Financial Advisor.

Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Bogart Wealth, LLC [“Bogart Wealth”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level (s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Bogart Wealth. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Bogart Wealth is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Bogart Wealth’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at bogartwealth.com

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