How Long Should You Keep that Document?
Maintaining and organizing your important financial, legal, and personal documents annually can make information easier for you to find and for future heirs or decision-makers to step in and navigate your filing system. In addition to helping you find what you need when you need it, organizing your documents provides three important benefits to you.
Peace of Mind
A certain peace of mind comes with knowing you have everything in its place. A clean document storage system stays clean throughout the year as long as you file documents in the right place.
Lower Risk
The more information that you have out there, the greater opportunity there is for an identity thief to find your personal information. Properly disposing of data reduces the chances of becoming an identity theft victim.
Ease of Transition
If you are the master of the document storage, an organized system with only the necessary information will save others hours, if not days, sifting through documents that are no longer needed.
How to Use this Page
The purpose of this page is to provide individuals with a resource to answer questions regarding document storage.
The Document Guide below allows you to search and sort the table to find documents and how to treat them. The table is presorted by the suggested length of storage so documents at the top can be disposed of more quickly.
Additionally, I provided an Additional Information section below for more information on specific topics.
Document Guide
This table is meant for information purposes only and does not represent a specific recommendation. If you have questions, consult your accountant, attorney, or financial institution for more information. The table may be best viewed on a larger screen.
| Document Name | Keep For | Notes |
|---|---|---|
| Bank Statements | 1 Year | |
| Investment Account Statements | 1 Year | |
| Pay Stubs | 1 Year | Keep long enough to verify information on your W-2 |
| Tax Return | 7 Years | Official guidelines may be fewer but maintaining tax documents for 7 years just keeps things easy. |
| Supporting Tax Documentation | 7 Years | See Additional Information below for Common Documents |
| Charitable Donation Receipts | 7 Years | 7 Years |
| Form W-2 | Contingent: 7 Years and Until Claiming Social Security | W-2’s validate your Social Security earnings when you claim. If you aren’t regularly reviewing your Social Security benefits and making corrections along the way, you should hang onto these. Of course, if you are reviewing your record and double checking it’s accuracy, you can let go of these. |
| Medical Bills | Contingent: 7 Years if Itemized or to HSA Depletion | If you have a Health Savings Account (HSA), keep medical bills paid out of pocket permanently or until HSA is depleted |
Credit Card Statements or Bills | Contingent: Immediately after Payment | |
Utility Statements or Bills | Contingent: Immediately after Payment | |
| Receipts - No Warranty | Contingent: After Return Period is Over | |
| Receipts - Warranties | Contingent: Keep Until Warranty Expires | |
| Insurance Claims | Contingent: Until Claim is Resolved | Original Needed |
| Home Improvements | Contingent: Until Home Sale | See Additional Information below for more information |
| Home Purchase Documents | Contingent: Until Home Sale | |
| Investment Purchase Confirmation | Contingent: Until Sale + 7 Years | Most investment companies now track basis for you beginning in 2012. However, older positions may require documentation for tax purposes. |
| Life Insurance | Contingent: While Active, or Open Claims | |
| Health Insurance | Contingent: While Active, or Open Claims | |
| Disability Insurance | Contingent: While Active, or Open Claims | |
| Auto Insurance | Contingent: While Active, or Open Claims | |
| Last Will and Testament | Permanently | Original Needed. Keep your active Last Will and Testament. Dispose of Inactive Last Will and Testament. |
| Form 8606: Nondeductible IRA | Permanently | This form is filed with your tax return. If you’ve completed a non-deductible IRA contributions (Form 8606), made a contribution to a Roth IRA, or made a conversion from a Traditional IRA to a Roth IRA, you’ll want to maintain permanent documents on these. |
| Form 709: United States Gift Tax Return | Permanently | This form is filed with your tax return. Your executor will need it when your estate tax return is done at your death. |
| Social Security Cards | Permanently | Original Needed |
| Birth Certificates | Permanently | Original Needed |
| Marriage Certificates | Permanently | Original Needed |
| Adoption Papers | Permanently | Original Needed |
| Passports | Permanently | Original Needed |
| Death Certificates | Permanently | Original Needed |
| Powers of Attorney | Permanently | Original Needed |
| Legal Filings | Permanently | Original Needed |
| Military Records | Permanently | |
| Trust Documents | Permanently | Keep active trusts. Dispose of inactive trusts |
| Medical Directives | Permanently | |
| Education Certificates | Permanently or While Active | |
| Auto Loan | Contingent: Until Paid Off | Auto Loan or Lease. Once paid off, keep the final payoff letter permanently. |
| Home Loans | Contingent: Until Paid Off | Mortgage, Home Equity Loan (HEL), Home Equity Line of Credit (HELOC). Once paid off, keep the final payoff letter permanently. |
| Other Loans | Contingent: Until Paid Off | Personal Loans, Student Loans, Family Loans, Margin Agreements. Once paid off, keep the final payoff letter permanently. |
| Employment Contracts | Contingent: While Active or If Non-Completes |
Additional Information
How to store sensitive documents is an important consideration. You want the document storage to be secure (limit exposure to theft), safe (limit exposure to loss from fire), and accessible.
Storage for Physical Documents
- For many documents, a simple filing cabinet with a lock will do. You will have quick access to your information without having to go to more secure options.
- For storing important documents in your home that are more difficult to replace, you should invest in a good fireproof safe. It does not have to be large, but it does have to be secure. The best safes are beyond my expertise, but there are many experts to direct you to the right one.
- If storing important documents in a safety deposit box, your primary consideration is ensuring timely access to your information. With safety deposit boxes, this could be a challenge. It will take some time for an heir working with a judge to gain access to your box, so this may not be the best solution for certain documents like your Will.
Storage for Digital Documents
Digital storage is fantastic because it reduces clutter and makes your filing cabinet easily sortable, filterable, and searchable. And thankfully, the IRS and many other organizations accept digital documents instead of original copies, allowing you to keep all of these documents in a secure, digital location. The two most important considerations here are security and redundancy.
- Security – Ensure you use proper password protection strategies and encryption in your cloud storage or physical hard drives.
- Redundancy – Keeping the same information in multiple places gives you access to your information if one of your storage solutions is compromised in some way.
There are a variety of solutions, from cloud storage to hard drive backups. These services offer secure storage to some of the biggest companies in the world. They are in the business of making sure your data is secure. Some of the most common are:
Getting documents to the cloud is becoming easier as well. There are a variety of great personal scanners, and many of the above services have a feature where you can scan documents right to the cloud using your phone.
Initially: Like any clean out, the initial organization may take time. It doesn’t have to happen all at once. Try spending a few minutes tackling a folder every weekend. The job will be done before you know it.
Regular: Once your storage system is organized, it will remain so as long as you regularly store documents where they should go within the system. Unlike my family living room where toys are pulled out constantly, papers tend to stay in their place.
Annually: After tax filing is a great time to review your storage and make sure everything is in it’s place. You can dispose of your oldest tax return and replace it with the newest one.
Any document that contains the following:
- Full names
- Phone numbers
- Account numbers
- Routing numbers
- Driver’s license numbers
- Policy numbers
- Usernames
- Passwords
- Membership information
- Medical record
- Signatures
- Mailers with Name, Address, and Name of Institution that you use.
Do not just put documents with sensitive information in the trash or recycling. Documents should be disposed of securely to prevent identity thieves from accessing it. Here are the best ways to get rid of sensitive information:
Shredding Documents
By Hand so long as you ensure the important information cannot be readily pieces back together – the smaller the better. This is not the best option but will work in a pinch. There are also shredding scissors for purchase.
Home Shredders are a great option for shredding documents at any time. Shredders have different levels of shredding capability from strip-cut, cross-cut, to micro-cut. If you go with a strip-cut which is the most common and budget friendly, try to find one with a credit card shredder.
Shredding Events in your community are another option. These are events hosted by organizations and provide a secure way to shred your documents. You can search your city’s website or local event notifications for announcements.
Shredding Services are offered for a fee by various companies including office supply companies (Office Depot, Office Max, Staples), UPS Stores, and FedEx Stores. Call ahead for details.
Burn ‘Em Up
My personal favorite option is just to burn up the documents. Just make sure you don’t break any city codes if applicable or burn down your house. I prefer a nice bonfire with smores.
When you go to sell your home, the gain you will recognize on the home is based on the Selling Price minus Selling Expenses minus Adjusted Cost Basis.
Adjusted Cost Basis is, in a nutshell, all of the money you spent to purchase the home (purchase price, agents fees, inspection fees, etc.) and any money you spent over the course of ownership on Capital Improvements. The capital improvements increase your basis and thus decrease your potential capital gain recognized. For most individuals that do not own more than one home, all or most of your capital gain could be excluded due to the Section 121 Exclusion.
Capital Improvements that Increase Basis
Useful Links
Property (Basis, Sale of Home, etc.) 3 | Internal Revenue Service (irs.gov)
Publication 523 (2021), Selling Your Home | Internal Revenue Service (irs.gov)
Here is just a list of the most common tax documents to hang onto per the above schedules:
- Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors including accompanying Schedules
- Form W-2, Wage and Tax Statement
- Form W-4, Employee’s Withholding Certificate
- Form 1099-MISC, Miscellaneous Income
- Form 1099-G, Certain Government Payments
- 1099-INT, Interest Income
- Form 1099-DIV, Dividends and Distributions
- Form 1098-T, Tuition Statement
- Form 1098, Mortgage Interest Statement
- Form 1095-A, Health Insurance Marketplace Statement
- Charitable Donation Receipts