What financial papers to keep and what to toss.
Throw Out Unnecessary Financial Papers
Clients ask what financial documents you can throw away and what you should keep?
Keep It
- Bank statements: Use your bank statement to balance your checkbook. Once that’s done, file each monthly statement for the current year. Once the year ends, you can toss the statements.
- Canceled checks: Thanks to recent regulations and the growing prevalence of online banking, you might not receive canceled checks anymore. But if you still do, keep them for one year in case you have some type of payment dispute. Keep all canceled checks related to home improvements (you may eventually need them to determine your cost basis in your home), major purchases (may need for insurance purposes), or tax-deductible items indefinitely.
- If you pay your bills online, print out a copy of the checks that you need to keep for tax or home-related purposes.
- Tax returns and supporting documentation for the past seven years (three years from the date of filing is the rule for most returns, but seven years covers a few other situations). After seven years, keep the return itself, but you can toss the supporting documentation.
- Birth certificates, death certificates, marriage certificates, adoption papers, divorce decrees, Social Security cards
- Deeds
- Car titles
- Current insurance policies
- Current estate documents: wills, trusts, powers of attorney
- Contracts still in effect
- Medical records
- Prospectuses until you sell the investment
- Canceled checks for non-deductible traditional IRA contributions. Keep all IRS Form 8606s (part of your tax return when you make non-deductible traditional IRA contributions).
- Investment confirmation statements for purchases and sales
- Notices of stock splits, mergers and buyouts on investments you still own
- Year-end brokerage statements showing reinvested dividends and interest
- Monthly credit card statements (especially if they list items you deduct on your income tax return)
- Property tax bills
- 401(k) statements for the current year. Once you get the year-end statement, you can toss the older quarterly statements.
Toss It
- Throw away canceled checks (if you still get them) for routine purchases such as groceries, gasoline, clothing, utility bills (unless you deduct them).
- Your bank and brokerage statements may come with "stuffers"--typically some marketing material about other services. Read it once when it arrives and if you don't plan to use that service, throw it out.
- Bank deposit slips and ATM receipts: Once you've verified these on your monthly statements, toss them.
- Keep payroll stubs until you receive your annual W-2 or 1099. Once you've verified the information on those documents is right, toss the monthly paperwork.
- If you're going to vote your proxies related to investments you own, do it right away. If you choose not to vote your proxies, toss them.
- Read your annual reports when you get them. Then you can throw them out.
- Old insurance policies or estate documents.
- Credit card receipts--after you verify them on your monthly statements.
- Utility bills (unless you deduct them for tax purposes)
- Old Social Security statements
Tip: To help you tame your financial paperwork, there are two purchases you may want to make, if you haven't already: a shredder and a scanner. When you throw away financial documents, it's best to shred them. By doing this, you help prevent identity theft. Home shredders are not expensive--you can buy one for as little as $20. Tip: You may also find it helpful to scan documents you want to save instead of storing the paper files. For example, if you receive monthly brokerage statements, you may want to scan in past statements and keep only paper copies of trade confirmations and year-end statements (some of you may want to keep digital copies of everything). You can save your electronic documents to a CD and really cut back on physical storage space.
By Sue Stevens, CFA, CFP, CPA
|