Tax Preparation: Financial Records Rundown

"How long do I have to keep this stuff?" may be a question you find yourself asking each and every tax season. To answer this question and to help keep your financial documents for the future, we have compiled this handy list of What to Keep and What to Throw Away. 

Shred/Throw Away Monthly:

— ATM, bank deposit, and credit card receipts, once checked against monthly statements.
– Sales receipts for minor purchases that are not under warranty and/or will not be returned.

Shred/Throw Away After a Year:

– Monthly bank and credit card statements (if you do not itemize deductions).
– Monthly/quarterly brokerage and mutual fund statements, once reconciled with year-end statements.
– Monthly mortgage statements (if year-end statements clearly show the total amount paid in interest and property taxes over the past year).
– Phone/utility bills, if you don’t have a home office, use your phone for business calls, or anticipate any need to prove long-term residency.
– Paycheck stubs, after you’ve reconciled them with your annual W-2 or 1099 forms.

Retain for Seven Years

– W-2 and 1099 forms
– Year-end statements from credit card companies.
– Phone/utility bills if you deduct a portion for business expenses, have more than one home, or have moved within the past few years.
– Cancelled checks and statements for annual mortgage interest and property taxes, deductible business expenses, child-care bills, out-of-pocket medical costs, or any other tax-deductible expense.

Retain Indefinitely

– Receipts for major purchases (items where replacement cost exceeds the deductible cost on your homeowners’ or renters’ insurance policy).
– Annual tax returns and year-end summaries from financial-services companies.
– Confirmation slips that list the purchase price of investments you own.
– Home improvement records; settlement statements and warranty deeds for real estate transactions.
– Beneficiary designations.