Personal Document Retention Guidelines
As our society moves increasingly toward electronic records, it’s important to know which of those records you need to maintain and which you can delete without fear of data loss or future consequences. It’s still important to maintain certain original documents as well. While there are no hard and fast rules for all documents, following are some commonly suggested guidelines:
Tax Returns: Seven years is the general rule of thumb for keeping tax returns and the related documents, such as those that support the income and deductions reported on your tax return. The basis for this is that the IRS has three years to audit your return from the date of filing. If during an audit the IRS finds a substantial omission, such as under reporting income by 25% or more, it has six years to challenge your return, so you want to have those documents available to address the challenge.
Insurance Records: Medical insurance forms and home insurance forms should be kept five years in case you have any future issues that are related to the claim. Keep receipts for big ticket items (antiques, jewelry, autos, furniture, etc.) as long as you have the item to document the original cost in the event of an insured loss.
Life Insurance Policies: Keep the original policy for the life of the policy plus 3 years.
Medical Records: Certain medical records such as premium statements, doctor’s bills, hospital bills and prescriptions should be kept for five years from the date of service or for seven years if they support deductions taken on your tax return. Other medical records such as for chronic conditions should be kept for five years from the time you are no longer being treated for the symptoms referenced in those records.
Bank Statements/Credit Card Statements: Generally it is recommended that you maintain one year’s worth of statements, unless they are easily accessible online through your bank. If the statements support tax deductions then they should be kept for seven years along with your tax files.
Utility Bills: If utility bills support deductions made on your tax return, they should be kept for seven years from the end of the year in which they were claimed. All other bills can be shredded after three months.
Pay Stubs: Keep the latest stub if it contains the year-to-date salary history or keep a year’s worth of stubs until you receive the year end check that recaps the entire 12 months of pay, social security and taxes withheld. Once you receive your W-2 and verify that it matches your pay stubs, you can safely shred your old stubs.
Warranty Documents: Dispose of when the warranty expires or you get rid of the item under warranty.
Receipts for Purchases: Once you’ve verified that a charge to your bank account or credit card matches the purchase receipt, you may dispose of the receipt unless you need it for a future merchandise return. Pay special attention to restaurant receipts to ensure that the tip amount you wrote matches the charge to your account – your receipt will serve as your proof if a wayward server inflates his/her tip.
Once you determine which records you no longer need to keep, it’s important to properly dispose of them. Shredding the documents before putting them in the trash will help prevent identity theft. If you would like more information or guidance on document retention and destruction policies, please contact us.
For our article on business document retention guidelines, please click here.
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