Tax Time: Review and Plan Your Document Retention Schedule

taxes 150x150 Tax Time: Review and Plan Your Document Retention ScheduleAs Needed

  • Insurance documentation: Keep everything as long as you have the policy. Also save any paperwork regarding unresolved claims/coverage.
  • Keep utility, cell phone, and similar bills only until you receive conformation that your payment has been processed. The only exception to this is if you are self-employed. Self-employed individuals should keep these records longer so they can prove any deductions on their tax forms.
  • Loan documentation: Keep all paperwork until you pay off the loan. Then, you can shred everything except the document that proves you paid in full.
  • Monthly bank statements: Find out how much time your bank and/or credit cards give you to challenge incorrect statements. Keep them until you are no longer able to challenge them. This is typically between 60 days to one year after the mistake is made.

 One Year

  • Paycheck stubs: Don’t throw away your paycheck stubs until you receive your annual W-2 form from your employer. If everything matches, feel free to shred your pay stubs. If there are any discrepancies, request a W-2c (a corrected form). Then, keep your W-2 or W-2c forms for at least a few years. You may want to keep them until you start receiving Social Security benefits, just in case there is an issue regarding your income in a particular year.

Four Years

  • Bill of lading: A document between the shipper and the carrier of a particular good that details the type, quantity, and destination of the good. This document governs all legal aspects of the transfer.

Seven Years

  • Tax returns, canceled checks/receipts, records for tax deductions taken: The IRS has six years to challenge your return if it thinks that you underreported your gross income by 25 percent or more.

Forever

  • All paperwork related to bankruptcy, inheritance, and wills.
  • Auditor’s reports.
  • House/Condominium records: If you plan on selling your property in the future, it is a good idea to keep any and all documents, as any money you put into a house/condominium can result in a greater profit (capital gains) when you sell your property. Having these records can lower your capital gains tax.
  • IRA contribution records: If you made a nondeductible contribution to an IRA plan, such as a Roth IRA, keep your records to show that you were already taxed for this money.

Where to Keep Documents

  • BBB does not recommend relying too heavily on the Internet for storing important documents.
  • Get a filing cabinet with a lock, or a safety deposit box.
  • Go through your files at least once a year to avoid accumulating too much paper.
  • Be sure to shred any documents with personal information on them. When in doubt-shred it! You can shred for free at BBB Shred Day on Saturday, April 21. Shredding events are held all around the country. To find an area location near you, www.bbb.org/us/secure-your-id-participants.

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