How Long Is Long Enough to Keep Documents?

Posted on April 18, 2022 by shieldsandboris

You know that it is important to hang on to certain papers such as medical records and financial documents, however, there is a fine line between saving what is important and hoarding. Here is where you should draw the line:

  • Tax Returns – Unless you plan on running for president, you will only need to hang on to your tax returns and supporting documents for three years counting from the date of the return or the date you filed, whichever is latest. This is the window that the IRS has to audit you.
    If you have a complex return or are self-employed, that window doubles to six years since that is the window the IRS has to audit you if they believe you have underreported your income. Before you shred those old check stubs, be sure to compare them to our Social Security account to ensure they have accurately recorded your earnings for each year.
  • Home Information – If you own your home, you should hang on to financial records relating to your real estate for seven years after the date you sell the home. Save your home improvement receipts too. They may help reduce the taxes you owe if you sell the home.
  • Investments and Banking – If you or your spouse plan to apply for Medicaid for nursing home care, you will have to produce five years of financial records including bank statements, credit card statements, and brokerage statements. This is so the government can check for transfers.
    Otherwise, it is a good idea to hang on to financial statements for one year, except those related to your income. Keep in mind that your bank or credit card company may have statements going back several years online. Stocks and bonds records should be kept for six years after you file a return reporting their sale.
  • Medical Records – Here is where it is important to err on the side of caution. Most experts recommend keeping all medical test results indefinitely. Normal or not, the information may be useful in the future, particularly if you are later diagnosed with a major illness. Keep these records in a password protected folder on your computer so that family members can easily access them if they need to. In addition, keep proof of payments to medical providers for six years after the date of the payment.

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