How Long Should You Keep Bills and Important Documents?
Whether you keep hard copies or use a digital solution for your important documents, it’s easy to end up with a mountain of paperwork, statements, and forms. While some items such as your will or a Social Security card seem like obvious contenders in the “keep forever” pile, it can be much harder to determine how long you need to hang on to credit card statements and medical bills.
In a nutshell, you don’t need to keep as many documents as you might have imagined.
If you have items you’re deducting on your tax return, such as medical expenses, purchases, utility bills, and other expenditures, you’ll want to hang on to those important papers.
Luckily, there is a lot of good information out there to help guide you in managing all your documents that come into your life. Here are some ideas from Consumer Reports to get you started:
Important Papers to Keep Checklist
Keep for a year or less – unless you are deducting an expense on your tax return:
- Monthly utility/cable/phone bills: Discard these once you know everything is correct.
- Credit card statements: Just like your monthly bills, you can discard these once you know everything is correct.
- Medical bills: These can be discarded once you know your insurance has paid the claim.
- Bank statements: Once you know your monthly statement is correct, you can toss the statement at the end of the year.
- Pay stubs: These can go after you reconcile them with your W-2 for the year. A lender may want to see a few months’ worth if you are planning to apply for a mortgage or loan. This also applies if you will be applying for grants or initiating any plans where proof of income will be important.
Keep for longer:
- Tax returns: Keep your returns and associated supporting documents for at least seven years. Remember, the IRS can perform an audit up to six years after you file if it appears you’ve incorrectly reported your income.
- Home-related documents: Retain purchase documents, home improvement records, permits and inspection documents for as long as you own the home.
- Insurance policies: Hold onto to your policies for home/renters insurance, car insurance and umbrella insurance for the year. When you get a renewal, you can discard the old one. Keep your life, disability or long-term care policies as long as they’re in force.
Invest in a firebox or a safety-deposit box for:
- Birth certificates
- Adoption records
- Death certificates
- Marriage and divorce papers
- Military records
- Wills, powers of attorney and health care proxies
- Social Security cards
- Appraisals for jewelry, art or other valuable property for as long as you own these items
- An annually updated video of your home’s contents. This simple act can help with insurance claims in the event of a home fire or other disaster.
Remember to discard your important documents in a secure manner to avoid nightmares such as identity theft. If you are using digital storage, make sure you store these in a safe, secure and accessible place, such as a password-protected external hard drive.
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