Document Retention Guidelines

Here's something that actually is useful from Martha's magazine. Now that taxes are done, it was time for me to get in the basement and do about 6 months of filing. What a wonderful way to spend a sunny 50 degree Sunday afternoon-right? Anyway, here's what Martha says about storing of important papers.

Auto Records - While active / Six years: keep auto records for as long as you own the vehicle. Hold on to sales transaction data for six years after the car is sold.

Insurance Policies - While active: after you receive the updated policy, shred the old one.

Warranties & Contracts - While active: toss them as soon as they expire

Paid Bills - While active: after you receive a cancelled check or credit card/bank statement, most bills and receipts can be shredded. For insured purchases, keep paperwork as long as you own the item. I think paid bills should be kept 1 year, but Martha does not agree.

Paycheck stubs – While active: hold onto these until you’ve checked that the W2 from your employer is correct.

Quarterly Investment Records – One year: after you confirm your annual statement accurately reflects your quarterlies, shred the latter.

Credit Card & Bank Statements – Seven years: these can serve as proof if you file an insurance claim and as a backup for tax documentation.

Receipts and Documents for tax-deductible purchases – Indefinitely: The IRS can go back at least three years if good faith errors are suspected, and indefinitely if it believes you have underreported your income by more than 25 percent.

Tax Returns – Indefinitely: These are useful references for checking income or medical claims from a particular year.

House Related Records – Indefinitely: save documents pertaining to closings, deeds, assessments, and home-improvement expenses.

Most IRA Contributions – Indefinitely: keep these in case you need to prove that you already paid taxes on this income.

Annual Investment Statements – Indefinitely: retain these until you sell the securities. Keep the record of that transaction indefinitely.