Tax and Home Records Checklist: What to Keep and for How Long

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Tax and Home Records Checklist: What to Keep and for How Long

Tax and Home Records Checklist: What to Keep and for How Long

Keeping complete financial records is critical to your ability to file your taxes or prove your status on a debt or loan later in life. The good news is that while some tax and home records need to be kept for many years or forever, others can be disposed of after a shorter period of time.

Items You Need to Keep Forever

There are very few items you actually need to keep forever, but those that you do are important. These include your birth certificate, marriage license(s), wills, death certificates, and adoption papers. In terms of your home, you should keep your deed and proof your mortgage loan has been repaid.

Active Documentation

Some of your tax and home records need to be kept throughout the term of an active contract. These include insurance policies, pension and retirement plan documents, stock certificates and records, and active contracts of any kind. Property tax documents should be kept if you are disputing the bill. Home improvement contracts and records need to be kept until the work is done to your satisfaction unless you are claiming the work on your taxes, in which case you need to keep the records for 3 more years.

Sales receipts should be kept until the return or exchange period has expired, or until the associated warranty expires.

Three Years or Seven Years?

The old rule of thumb was to keep financial documents for 7 years, but today that is only really recommended for proof you’ve paid off a loan. Most other documents should be kept for a minimum of three years. These include your old income tax returns, medical bills, old insurance policies, home sale records, stock sale records, investment statements, and any documentation pertaining to income and tax deductions. Please note that there is no statute of limitations if you file a fraudulent tax return, neglect to file a return at all, or fail to report up to 25% of your income – so you may want to keep those documents if you’ve knowingly done any of those things.

Documents to Dispose of After a Year or Less

All of the above documents can impact your income taxes and home sales, but there are other forms of financial clutter in your life. Utility bills, cancelled checks, bank statements, investment statements, credit card receipts, and pay stubs are all things you can dispose of after a year as long as you do not have any disputes. If any are used for tax purposes they should, again, be kept for three years. ATM printouts can be discarded after you balance your checkbook at the end of the month.

If you have questions, or are not sure how long to keep a specific document, it’s always best to consult your accountant or financial advisor for a definitive answer.

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