Wednesday, July 25, 2018

Documents to Keep or Shred

People often call me to ask how long they need to keep copies of tax returns or a copy of their divorce judgment. So I decided to prepare a list of documents that should be kept. Turns out that you need to keep more than you think.

Here are some documents you may want to consider and the length of time to keep them.

1.        Tax returns and supporting documents: Keep them for three (3) years.

2.        Deductible expenses such as charitable expenses: You need not keep originals. They can be scanned in and copied. Cancelled checks or credit card statements will suffice. Check IRS Publication 526 for additional information. Your bank keeps records of checks, credit and debit information for seven (7) years.

3.        Taxable brokerage accounts: You must be able to show what you paid for a stock or mutual fund in order to calculate gains or losses later. As of 2011, brokerage firms began keeping the records for you.

4.        Major insurance policies: Keep indefinitely.

5.        Home Personal Property Inventory:  In case property is stolen or damaged, insurers may pay upon proof of loss.  Photos are most helpful. Keep indefinitely.

6.        Agreements for all major loans such as mortgages, mortgage payoff letter, child support, alimony/spousal support payment records, divorce judgment documentation:  Keep indefinitely.

7.        Birth certifications, social security cards, military discharge papers:  Keep indefinitely.

8.        Estate planning documents, beneficiary assignments for insurance policies or investment accounts:  Keep indefinitely.

9.        Appraisals for owned property:  Keep indefinitely.

A good way to accomplish keeping documents you need is to shred those you don’t need on a periodic basis. It can even be fun. Imagine going through old documents and finding grade school photos of you and your friends.