With tax season over and spring cleaning beginning, it is time to think about how long we need to keep certain financial documents, and where to store them.
Most financial services offer online profiles where you can find the documents you need in password protected online accounts. For instance, credit card, bank and brokerage statements and most bills can be found in your online profile going back several years.
How Long Does the IRS Require Me to Keep Certain Documents?
The IRS recommends keeping certain documents for specific periods of time. However, you may also need to consider how long to keep other documents, as well as the requirements of insurance companies or other creditors. The chart below shows how long to keep documents based on the different types of records.
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| What should I keep? | How long should I keep it? |
|---|---|
| Tax Documents (including the returns and supporting documents like canceled checks and receipts) | Normally 3 years from the date a return is filed. Keep records for 6 years if there is a possibility that income that should have been reported is not reported, and the amount of that income is more than 25% of the gross income shown on the return. Keep records indefinitely if not filing a return. (See the IRS link below this chart for other unusual situations.) |
| Property Records | Normally keep records relating to property for 3 years after the filing date for the year the property is sold. |
| Mortgage and Other Loan Documents | Until the loan is paid off and we have received confirmation of the payoff from the creditor. In the case of a mortgage on property, this would be a “release of lien” document from the mortgage company which provides written proof that the mortgage has been satisfied. Other loans would have different types of pay off documents. You may want to keep these documents that verify full payment for several years. |
| Paycheck Stubs | If not utilizing direct deposit, shred the paper stub at the end of the year after verifying that the stubs match our annual W-2. |
| Bills | Until our payment clears, UNLESS it’s a larger item like jewelry, computers, expensive equipment, etc. Keep these larger receipts in case of an insurance claim or possible depreciation expense. |
| Brokerage Statements | Hold on to monthly/quarterly statements until verified against the annual summary. It may also be wise to verify sales and purchases of securities until taxes are filed in case of capital gains or losses. |
For more information, please visit the IRS site at: https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records
Saving Documents to the Cloud
Even though many of our documents can be found online, keeping a digital copy of some of our records and supporting documents in a cloud-based file may be helpful. Most services offer a certain amount of free space with the option of purchasing more. Read our post on Tips on Choosing a Cloud Storage Provider.
If you have questions on any tax documents, please contact your DHJJ CPA at 630-420-1360.
Contact us if you need assistance in organizing your financial information
