When Is It Safe to Get Rid of Financial Documents?

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

After years of paying bills, filing taxes, receiving paychecks and the like, you're bound to wind up with folders and drawers filled with old financial documents - yes, even those of you who have gone paperless are likely to have some too. But as time goes on, are you really going to need to have every one of those documents saved? If you need some help organizing your financial statements and paperwork, here are some general guidelines you can follow:

Receipts
If you plan to itemize something on your tax return, you should keep the corresponding receipt for three years along with the appropriate tax records.

Paychecks
You should keep your paychecks until the end of the year in which you received them. However, don't be too quick to toss them on the first of the new year - you'll want to cross check with documents such as your W-2 and Social Security statement.

Utility Bills
Utility bills can typically be discarded after one year, but if you plan to claim a home office tax deduction, your timeline would be three years.

Credit Card Statements
Unless you anticipate needing them for tax purposes, you can get rid of credit card statements after you've had a chance to review all of the transactions and have proof that your payment was accepted.

Bank Statements
Aim to keep your bank statements for at least three years, as you'll need this period of time's worth of statements if you're ever audited by the IRS.

Loan Statements
You should keep any documents related to loans you are currently paying off handy, then, any records that you have regarding loans that have been payed off should be kept for seven years. 

Tax Returns
Tax files can get a bit tricky, since the length of time you should keep a document for will all depend on what that document is about. The IRS explains:

1. If you file a claim for credit or refund after filing your return, you should keep records for 3 years from the date you filed your original return OR 2 years from the date you pay the tax (whichever comes later).
2. If you file a claim for a loss from worthless securities or bad debt deduction, you should keep records for 7 years.
3. If you do not file a return, you should keep records indefinitely.

Other circumstances and their period of limitations can be found here, courtesy of the IRS.

Have questions about other financial documents you currently have on file? For more information about discarding sensitive information such as the above, contact one of our advisors at (516) 932-5130 or via email at info@americaninvestmentplanners.com. And remember, when it is safe to get rid of your paperwork, make sure you're shredding it!