When to Shred Your Documents — & When to Keep Them

Do you feel like paperwork is taking over your desk, your filing cabinet, or your entire home? There’s nothing like a whirlwind of documents and records to make you want to go on a shredding spree, but before you do you should know which documents to keep — and which ones are safe to get rid of.

There’s nothing like a whirlwind of documents and records to make you want to go on a shredding spree, but before you do you should know which documents to keep — and which ones are safe to get rid of. Tax records are one of these that can pile up easily, but before you throw out those old W-2s and last year’s tax return, wait!

In most cases, you have three years to amend your return and the IRS has three years to audit you. However, there are some exceptions. For example, if the IRS finds a major discrepancy, like 25 percent or more of your income has been unreported, then they can audit you up to six years back.

Also, entities other than the IRS, like creditors and insurance companies, may want to see tax documents that go further back, as well. To play it safe, hold on to tax records and supporting paperwork for at least seven years.

Still have the urge to purge? Here’s my easy guide to what you can safely shred, what you should scan, and what you should store.

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Shred it

shred receipts

That doesn’t mean you necessarily need to keep everything. There are some documents you can probably shred right now.:

ATM and deposit receipts: Shred once you’ve compared them against your monthly bank statement.

Monthly bank statements: Keep statements for one year, after that hold on to the annual statement and shred the rest (unless a statement has proof of a tax deduction).

Credit card bills: Once they’ve been paid, shred them — unless you need them to support a tax deduction, like a charitable donation or childcare expense.

Monthly investment statements: Hold onto annual statements and your most recent monthly statement, the rest can be shredded.

Pay stubs: Shred all of last year’s paystubs after you’ve compared them against your W-2, which should have arrived in January.

Insurance policies: Keep policies and statements until you renew or get a new policy, then discard the old paperwork.

Receipts: Most receipts can go to the shredder. But, you should hold on to receipts if they were for a big purchase or could be needed to prove a deduction on your taxes.

Scan it

file tax returns

Keep these papers in a secure location for a minimum of seven years. The IRS also recommends scanning the paperwork so you have a backup electronic version. Store these records on a portable storage device that you could easily grab in the event you needed to evacuate your home.

• Tax returns
• Receipts (needed to prove claims made on tax returns)
• Annual statements (bank, credit card, insurance, etc.)
• Charitable donation records and written acknowledgment from charities
• Mileage logs (if deducting miles driven for business or charitable purposes)
• Retirement account info & statements
• Annual investment statements
• Proof that you filed your tax return — email confirmation if filed electronically or a certified/registered mail receipt from the post office
• Proof of miscellaneous income (if it applies) — unemployment, gambling, alimony, jury duty, hobby incomes, prize money, etc.

Store it

marriage license

There are certain items you want to have original copies of tucked away safely. Keep them in a fireproof safe and/or a safe deposit box. If you store your “forever” documents in a safe deposit box, make sure you keep a copy of them at home.

• Loan and mortgage documents
• Estate paperwork (wills, trusts, health proxies, etc)
• Birth certificates
• Death certificates
• Marriage license
• Military service records
• Social Security cards
• Car titles (until you sell or get rid of the car)
• House deed
• Household inventory
• Life insurance policy

When to Shred Your Tax Records & Other Documents | thegoodstuff