Friday, February 5, 2010
Document Retention - What to Keep and What to Shred
The beginning of the year is always a good time to cull through previous years' bills, bank statements, and other documents. Many people are not sure what to keep and what can be shredded or thrown away/recycled.
Here are some basic guidelines to follow:
PAYCHECK STUBS: One year. Keep until you receive your W-2 at the end of the year to compare figures. Then shred the stubs and the W-2 will go with your tax return.
CREDIT CARD STATEMENTS: Proof-read your statement each month to make sure there are no fraudulent charges showing. Then, unless you need to keep the statement for a business expense, you can shred the statement after paying the bill.
BANK STATEMENTS: One year, same as credit card statements.
TAX RETURNS: Keep forever - including back-up tax information.
HOUSE-RELATED RECORDS: Keep those records on your current residence in the event you sell your home and need proof of home improvements which can lower your capital gains tax.
IRA CONTRIBUTIONS: Keep indefinitely - with the appropriate year tax records.
PAID BILLS: Keep only until you receive proof that payment has been received - canceled check, credit card statement. I keep one copy of each of my credit card and utility bills in case I need to contact the company.
INSURANCE POLICIES: Keep all active policies. You can shred old policies when they are replaced.
WARRANTIES AND CONTRACTS: Keep active and shred expired warranties or contracts and for any items you no longer own.
AUTO RECORDS: Keep for as long as you own the car. Retain sales transaction information for six (6) years after the car is sold.
INVESTMENT STATEMENTS: Keep one year current and retain the annual statements from previous years. Keep records of stock and securities transactions along with your tax information.