January 26, 2010


The beginning of a new year is a great time to put your financial house in order! Before discarding all of your files, however, you should know what documents to hold onto and for how long ...

The following are some general suggestions/guidelines about how long you should keep your personal finance records on file (Source -Bankrate.com)...


Bank Records. Keep from one year to permanently. Focus particular attention on those expenses related to taxes, such as business expenses and mortgage payments.

Bills. Keep from one year to permanently. In most cases, when the payment from a bill has cleared, you can get rid of the bill. Bills for large item purchases (jewelry, appliances, cars, furniture, computers, etc.) should be kept in an insurance file for proof of their value in the event of theft/loss or damage.

Brokerage Statements. Keep until you sell the securities. You need the purchase/sales slips from your stocks or mutual funds to prove whether you have capital gains or losses at tax time.

Credit Card Receipts and Statements. Keep from 45 days to 7 years. Keep your original receipts until you get your monthly statement; toss the receipts if the two match up. Keep the statements (with tax documents) for seven years if tax-related expenses are documented.

Home Documents. Keep from 6 years to permanently. Keep all records documenting the purchase price and the cost of all permanent improvements (remodeling, additions, and installations). Keep records of expenses incurred in selling and buying the property (such as legal fees and real estate commissions) for 6 years after you sell your home. Holding onto these records is important because any improvements you make on your house, as well as expenses in selling it are added to the original purchase price to determine your cost basis. This adds up to a greater profit when you sell your house, thus lowering your potential capital gains tax.

IRA Contributions. Keep indefinitely. If you have made a nondeductible contribution, keep the records indefinitely to prove that you already paid tax on this money when the time comes to withdraw.

Paycheck Stubs. Keep for one year. When you receive your annual earnings statement (W-2 or 1099) from your employer, make sure the information matches - if it does, toss the stubs, if it doesn't, request a corrected form.

Retirement Plan Statements. Keep from one year to permanently. Keep the quarterly statements from your 401(k) or other plan statements until you receive the annual summary ... if everything matches up, you can then toss the quarterly statements. Keep the annual summaries until you retire or close the account.

Tax Information. Keep returns, canceled checks/receipts, charitable contributions, mortgage interest and other information for 7 years. Why so long? The IRS has 3 years from your filing date to audit your return if it suspects good faith errors. They have 6 years to challenge your return if it thinks you underreported your gross income by 25% or more. There is no time limit if you failed to file or filed a fraudulent return.

- Recordkeeping for Individuals (IRS Pub. 552)
- Record Keeping (Iowa State University Extension)