A frequent question I get in my office is “How long do I have to keep THIS? Or “Do I need THIS ANYMORE? Can I get rid of THIS?
THIS could be tax return, investment statement, and bank statements, stocks and bonds information.
Records retention varies by item.
In general, items that needs to be kept permanently:
- Vital records (birth/death/marriage/divorce/adoption)
- Legal documents – real estate, wills, contracts
- Retirement and pension records
- Investment trade confirmations*
*In 2012, it became mandatory for investment firms to keep cost basis information and report it to the IRS along with proceeds when sold.
- Trust documents
- Income tax returns with critical activities such as purchase and sale of properties
- Log of passwords for all family financial accounts
Consider a permanent file for the following items:
- Insurance policies
- Warranties and manuals
- Real estate documents
- Home maintenance and improvements
- Personal home inventory**
**Inventory records are necessary for insurance claims. (Threat of forest fire reaching our home got our inventory completed.)
Keep for 7 years:
- Tax records of general nature
- Supporting documentation to tax returns
- Settled accident claims
- Mortgages/deeds/leases on sold property
- Records on sold stocks and bonds
- Banking records
Keep everyday paperwork for 3 years. You probably won’t need to have a utility bill or credit card statement past a year.
You may be able to print a summary of the year for utilities and credit card expenses.
Medical bills may be needed for insurance claims or tax deductions, health savings account reimbursement.
For a more complete list of record retention, try Better Business Bureau list at: http://www.bbb.org/blog/2012/04/tax-time-review-and-plan-your-document-retention-schedule/
Future blog posts will cover shredding, system of file retention, organizing your records.