Wednesday, May 18, 2011

Files: To Keep, or Not To Keep?

Although reorganizing my filing cabinet was fairly easy, I did have to spend some time researching how long I should be keeping everything.  I found that not every source had comprehensive information, so I had to compile from several sources, and then I also modified or created my own rules in some cases to tailor to my lifestyle.

Below are the guidelines that I used when de-cluttering my files.  Keep in mind that I'm not a tax or legal professional, so this is the intersection of common timeframes and what worked for me.  You may want to check with your accountant or lawyer if you are concerned about keeping or tossing certain documents in your files.

1) If needed for documentation of a tax deduction, file along with your tax returns.
2) If the receipt is for a major purchase (appliances, electronics, etc.), keep the receipt as long as you own the item.
3) If needed for documentation of a warranty, keep until the warranty expires or you no longer own the item, whichever comes first.  
4) If for a smaller purchase, keep only as long as the return policy is valid (or until you know you won't return the item, whichever comes first).5) Otherwise, keep receipts only until reconciled with your bank/credit card statement.
I've started writing the "expiration date" of the receipt on the top of each one to make it easier to find and discard old receipts when I flip through my records.  Target receipts helpfully print this right at the top; for the rest you'll have to do some quick math. 

Medical Bills: Unless you need to keep for tax purposes (either a deduction or as proof of spending for a pre-tax health savings account), keep only until balances are resolved.
If you have fairly small medical bills and pay with a regular account, I'm not sure you really need to keep these.  I am supposed to keep documentation of things I pay with my HSA debit card, so I'll hang onto them for a year. 

Bank & Credit Card Statements:  If needed for documentation of a tax deduction, file along with your tax returns.  Otherwise, keep only until reconciled.
I receive all of these online, so I don't have any physical files to keep.  I don't feel the need to print and file them since I can access them on my bank's website.  I also keep such a close eye on my transaction history that I don't need to spend very much time looking over my statements since I've already reviewed the transactions hitting my account throughout the month.  It is important to do, however.  Just last week I found that a hair salon overcharged my card.  I might have missed that if I wasn't paying close attention, since it was a relatively small amount in relation to what my overall credit card bill would have been. 

Utility Bills:  Keep three months of history.
After you pay the bills, you might need utility bills to prove residency for certain things, but I'm not sure I have anything left to prove in my current state, so I'm not even sure this much is necessary for me.  I figured I'd hold onto them for three months since they don't take up too much space. 

Retirement/Investment Statements:  Keep quarterly statements until you receive your annual statement and confirm that it reconciles.
I found that my annual statement from the end of 2010 looked almost exactly like my other quarterly statements, so if you're having a hard time finding an annual statement, take a closer look at your fourth quarter report to see if that includes annual data! 

Social Security Statements:  Keep the most recent year's statement. 

Pay Stubs:  Keep until reconciled with your W-2.
My paycheck is direct-deposited into my checking account, and all of my pay stubs are available online, so I don't have any paper files for these.  Like your credit card statements, you should check your W-2 to make sure it's accurate.  If not, you can request a correction before filing your taxes. 

Home Documents (Purchase/Sale/Mortgage):  Keep six years after you sell the home.
This basically follows the logic of the tax return guideline, since the main reason you would keep this information would be in relation to taxes.  This would also include any documentation of major improvements you've made while owning the home. 

Tax Returns: Keep for 7 years, along with related documentation.
This is based on the longest timeframe the IRS could audit your return.  I found some sources that recommended you keep the returns indefinitely (although you can discard the documentation after 7 years).  To me that seems unnecessary, but I'd check with your tax advisor if you think you have a reason to keep them longer than the audit period.  A good compromise might be to scan the old returns and save them on a backup drive. 

Insurance Policies:  Keep for the life of the policy.
If your company is like mine, you might only receive the actual terms of your policy when you open it, and then a smaller packet each renewal detailing costs.  Keep the terms if you don't receive a new copy each year. 

Leases:  Keep until all conditions of the lease have been satisfied.
One source recommended tossing the old lease when you sign a new one.  However, if you're signing a lease with a different entity (such as, if you're moving from one apartment to another), I'd probably hang on to the old one until you've moved out and received back any deposits owed to you.

Is there anything in your files that you're not sure how long to keep?



  1. Great post! You clarified a lot for me :) I had no idea how long I was suppose to keep certain things I just purged as the years would past.

  2. @Counting all my stars, glad you found it helpful!