Are you not sure about how long to keep documents? Digital storage makes it possible to hold on to many types of documents indefinitely. But it’s still important to keep paper copies of several different types of personal documents, which means that they take up vital storage space in your home office. Follow these guidelines for establishing how long to keep documents and when it’s time to get rid of them.
In this guide, we’ll discuss:
- How Long Should You Keep Tax Documents?
- How Long to Keep Documents Like Your General Financial Records
- What Other Types of Paperwork Do I Need to Keep Long-Term?
- How Can I Organize All of My Important Documents?
How Long Should You Keep Tax Documents?
During tax season, you may need to carefully consider how long to keep documents that help you file your taxes correctly. This doesn’t just include your tax returns themselves. It also includes the assortment of other documents that go into filing your taxes every year.
IRS audits can and do happen. If you can’t produce the relevant paperwork, then you may find yourself struggling to come up with the evidence you need. When it comes to your tax records, it’s better to be prepared. Know how long to keep documents in these three categories:
1. Keeping Track of Pay Stubs
If you still receive physical pay stubs, keep track of them throughout the year until your W-2 comes in. If you do not receive physical copies of your pay stubs, consider taking screenshots or saving emails to a specific folder on your computer. Then, you can access them easily if needed.
You can dump your pay stubs once you have a completed W-2 in hand for the year.
2. Tracking Giving Receipts, W-2s, and Other Vital Tax Forms
When tax time rolls around, you’ll often be inundated with tax forms. This includes:
- Giving receipts from charities or religious organizations that you donated to over the course of the year
- W-2s
- Earning statements that indicate how much you’ve made from your savings accounts
- Your investment accounts
- Anything else that has made you money over the course of the year
3. Knowing How Long to Keep Documents If You’re Self-Employed
If you’re a small business owner, a freelancer, or a contractor, you may end up with even more paperwork to deal with. This includes a potentially daunting stack of 1099 forms. What’s the commonly accepted answer about how long to keep documents like 1099 forms? All of those items should be kept for at least seven years before being disposed of properly. The IRS has six years to file a claim against you for any income that you failed to report properly, so you should keep up with all vital tax information for at least that long. Tuck away:
- W-2s
- 1099 forms
- Additional statements of earning
- Your tax forms, or copies of those forms
Once seven years have passed, you can get rid of those records and make room for new ones. Until that time, keep those forms in chronological order. You can choose to store them in physical or digital format — as long as you have an organizing system that works for you and will make it easy to access vital information as needed. Remember, storing paper records long-term could require special care, like that given to books, to help protect those records.
PRO TIP: Organize your financial information as it comes in throughout the year
From expense reports to your income, keep all that information in a single file that you can easily refer back to whenever you need it. If you organize your financial documents throughout the year, you’ll find it easier to manage them at tax time. You’ll also reduce your stress levels during an often difficult time of the year.
How Long to Keep Documents Like Your General Financial Records
When it comes to your general financial records, the length of time you should keep that important paperwork varies. Your bank may still send you paper statements each month, or you may have emails that contain paperless banking information. Bills may come in via paper or show up as online statements. How long do you need to keep that information?
Managing Your Bills by Tracking Important Bills and Payments
Always keep bills, especially one-time bills or those that you do not have to pay on a regular basis, in a single location that you can easily access. Consider organizing them by their due dates so that you do not miss any important payments. That could lead to costly late fees. Keep up with utility bills and normal bills for a month, at least until the next one comes in.
Once you pay a bill, note the verification of the payment and how you chose to pay it. Monthly, recurring bills may not need that additional documentation. But you should track medical bills to ensure that you know they were paid, when you paid them, and what method you used to pay those bills.
PRO TIP: If you work from home or are self-employed, you may need to keep annual utility bills with your tax paperwork
Many people who work from home choose to use their utility bills as tax deductions. Store these documents with the rest of your tax paperwork.
How Long Should You Keep Financial Statements?
Each month, you will receive bank statements, credit card statements, and statements from any other financial providers. Keep track of those statements until you reconcile them against the other records you keep — your credit or debit card register, for example. If you’re aiming for a one-touch system for organizing your mail, then open your statements and read through them as soon as they arrive. Make sure that the payments, deductions, and deposits match your personal records.
If you notice an inconsistency in your statements, deal with it as soon as possible. If you do not note any inconsistencies or problems, you can go ahead and get rid of those statements.
Also, don’t just toss your bank and credit card statements in the trash. They contain personal identifying information, including bank and credit card numbers, that could be incredibly tempting for identity thieves. Instead, shred those statements before you trash them. If you want to take it to the next level, throw them away in your kitchen trash can to mix the shreds with food waste.
How to Keep up With Loan Paperwork
Any time you take out a loan, you will want to keep track of the paperwork from that loan. Anything from a payday loan to a mortgage comes with substantial documentation, and you should keep track of that paperwork for the life of your loan. Make sure you keep:
- The initial loan paperwork: You should have a copy of the documents you signed at the time you took out the loan. Also, you should keep your copy of those documents to make sure there are no inconsistencies in your lender’s dealings with you.
- Copies of payments made to your loan: Once you reconcile the loan records with your personal paperwork, you can get rid of those copies; however, you should always keep the last couple of statements.
- Any additional communications the lender sends you about your loan: These are particularly important if you miss a payment or make changes to your loan, including refinancing your mortgage.
- Documentation showing that the loan is complete: Once you’ve paid off the loan, keep track of that paperwork until you’re sure the line of credit no longer shows on your credit report. This is especially vital if you have paid it off sooner than anticipated or issued a lump sum payment at the end.
Knowing how long to keep documents regarding your debts and payments can help protect you if the other party isn’t organized.
How Long to Keep Documents About Your Investments
Your investments may produce just as much paperwork as your loans and personal financial information. Just how long do you need to keep it? How long you keep investment documentation will depend on the type of documents. Here are a couple of tips:
- Keep track of quarterly statements until you receive your annual statement. Reconcile them with one another, then go ahead and get rid of the quarterly statements, since the same information is reflected in your annual statement.
- Keep track of annual statements with the rest of your tax documentation. You may need to keep this information for up to seven years, just like the rest of your tax documents.
What Other Types of Paperwork Do I Need to Keep Long-Term?
You may have a solid understanding of how you need to handle keeping up with your tax information and other important financial documents. But the other paperwork you track is equally important. This list includes personal documents like your birth certificate and social security card, insurance paperwork, and documentation on items throughout your home, like warranties and manuals.
Keeping up With Personal Documents
Many of your personal documents are critical to proving your identity, your marriage, or your children’s identities. While you can obtain duplicate copies of many personal documents if needed, keeping track of them is the better option.
What are personal documents? Personal documents include:
- Birth certificates for every member of the family
- Social security cards for each member of the family
- Your passport, if you have one
- Copies of the driver’s license of each member of the family who holds one
- Your marriage license, if applicable
- Your divorce documents, if applicable
- Death certificates when a member of the family passes away
- Military paperwork
PRO TIP: Make sure you keep all of these personal documents in a secure location.
You should not leave them sitting out where any visitor to your home — or worse, a thief — can access them easily. Instead, place them somewhere that only you know where they are. Consider investing in a fireproof box and storing them in a safe somewhere in your home to help protect them.
How Long Should You Keep Insurance Documents?
Knowing what insurance coverage you carry and how it protects you is critical to ensuring that you and all of the members of your family have the protection you need. Keep current copies of any insurance cards and insurance policies in one location in your home that can be easily accessed by all members of the family. Include:
- Auto insurance cards
- Health insurance cards
- Paperwork for your homeowners or renters insurance
- Life insurance policies
You should keep track of all insurance documents for the lifetime of the policy. As long as you are covered by the policy, you may need to be able to access that vital information. In some cases, you may want to keep up with your insurance documentation longer than the lifetime of the policy.
What are some other considerations for holding onto insurance paperwork?
If you have ongoing medical conditions, keep up with all health insurance information until the last bill from that time span has been paid.
Make sure that you do not have any outstanding medical bills before getting rid of information about that health insurance policy. You may need to be able to access it later.
If you were in an accident before an auto insurance policy ended, keep track of that information until the claim has been settled.
You may need to be able to access detailed information about the policy. It’s also important to keep track of documentation about the accident and the claim until you have fully settled any claim related to that insurance policy.
PRO TIP: Make sure both spouses are fully aware of where to find information about insurance.
You do not want your spouse to be misinformed about what life insurance you carry if something happens to you. Keep all that information in a secure location that you and your spouse can both access easily. If your spouse isn’t sure about how long to store documents like this, decide together.
Storing a Home Inventory
In addition to your insurance policy information, conduct a home inventory that will give you some idea of the items that you have in your home. In the event of a disaster, this inventory could prove crucial for getting the coverage you need from your insurance company. Keep this inventory in a secure location. On this inventory list, include:
- Antiques
- Furniture
- Electronics
- Kitchen appliances
- Specific items of value in your home
Place a copy of your home inventory with your insurance policy. You may want to keep it outside of your home, in a place like a safe deposit box. Also, keep a virtual copy of your home inventory that you can easily access if a disaster strikes your home. Deciding how long to keep documents about your insurance is easier if you store them in multiple locations.
You should update your home inventory annually or update your list any time you make a major purchase. An outdated list may give you a starting place, but it won’t provide you with access to the vital information that will provide you with compensation for your expenses after a disaster.
PRO TIP: Know what your homeowners or renters insurance policy covers.
Some policies, for example, may require you to take out specific coverage on jewelry or specific items that exceed a certain value.
How Long to Keep Documents Like Warranty Documentation, Owner’s Manuals, and More
Living life comes with a lot of paperwork. When you buy a new appliance, for example, you’ll bring home an owner’s manual, as well as a copy of the warranty documentation on the appliance.
How long do you really have to keep those items?
You should keep the warranty paperwork until the warranty on a specific item expires. If you lose the warranty paperwork, you may have trouble proving that you still have a warranty for that item. You might also forget who that warranty is through. Also, are you relying on a manufacturer’s warranty, or did you purchase extended coverage from the store along with your appliance or other items? Those details matter, so keep track of all warranty paperwork in a single location.
Most owner’s manuals can now be found online. Take a look at your item and see if you can look up that information online. If you can easily access the details or download a digital copy, you can probably get rid of your owner’s manual.
The exception: If you move frequently or plan to move soon, you may want to keep track of all of those manuals. Having physical copies can make it easier to put items together or install them in your new location.
PRO TIP: Dig through your warranty paperwork each year and get rid of anything that has expired.
Tax time is a great time to go through all of your paperwork to determine what you can get rid of and what you should keep.
How Long to Keep Documents from Your Big Purchases
If you take out a loan for a big purchase, keep track of all the information until the loan is paid off. If, on the other hand, you do not take out a loan for a specific item, keep up with purchase information until the warranty on that item expires.
Many stores can now track purchase information online, but they may struggle to pull up purchase information that is more than six months to a year old. Keeping track of that vital information yourself will help provide proof of purchase or indicate exactly when you made a specific purchase. This can help you keep your warranty current and receive compensation for any needed repairs.
How Can I Organize All of My Important Documents?
Organizing your home office is critical to maintaining your productivity and making it easy to lay hands on all those important records when you need to. Try these tips to make organization easier — whether you keep your documents in the office or use a climate-controlled storage solution for your needs.
Organizing Paper Documents
Keeping track of all your paper documents can quickly turn into a headache. Try some of these tips and tricks to make keeping up with paper documents easier.
1. Have a safe deposit box for any items that you do not need to access on a regular basis.
This may include personal documents like your marriage license or birth certificate that you do not need to produce on a regular basis. Also, add your home inventory or information about insurance policies to the box. Keeping it in a safe deposit box keeps it safe in a location outside your home. There, it’s also easily accessible to both you and your spouse.
2. Set aside a specific file or drawer for financial documents.
Organize those documents as they come in whenever possible. That’s often better than scrambling to organize them at tax time or at other critical times of the year. Create specific files and folders for the documents you will need to do your taxes. Also, establish folders financial documents you may need to access on a regular basis. Make sure there’s enough space, no matter what you decide about how long to keep documents at home.
3. Set aside a specific space for warranty paperwork, owner’s manuals, and other important documentation.
Keep this separate from your financial records. You may choose to store it in the same general location, but give these documents their own file.
Digital Document Organization
If you receive official documents straight to your email, you may assume that you do not have to worry about organizing them. A quick search will bring them up, right? In reality, you may need to organize your digital documents just as stringent as your physical paperwork. Try out these steps:
- Start a file for your financial documents. Place all documents related to your overall finances in that file. You may want to create separate files for documents you will need for your taxes.
- Add a new file each year. This will make it easier for you to keep all of your documents separate and allow you to sort through them quickly each year.
- Use a naming system that makes sense to you. You want to be able to easily access any document that you have a question about. So create a naming system or numeric system that makes it easy for you to find exactly what you’re looking for.
- Store your digital records in a cloud folder or back them up regularly. You don’t want to lose all that careful organization just because your computer failed. Also, digital backups give you enough space so you can be cautious about how long to keep documents you’re worried about.
Perhaps you already ascribe to a minimalist method or want to get rid of items in your home that you no longer need so you can free up your space. Deciding how long to keep documents is no easy task. But it’s well worth the effort. With these strategies, you can more easily organize, keep, and access your vital personal records and financial documentation for as long as you need them.
