Saturday, May 18, 2013

Spring Cleaning? What to Keep and What to Shred

The Federal Deposit Insurance Corporation (FDIC) says it can’t tell you when it is safe to throw away financial documents, but they do say to keep the information as long as the IRS can assess you additional taxes. Right now, that is approximately seven years. Laws change. Always check with your CPA for the latest laws.

Here are some guidelines:

Credit card statements:
Credit card statements with no tax or other long-term significance can be discarded after one year; remaining statements should be kept for up to seven years. If a consumer receives a detailed annual statement, they should keep it and shred the corresponding monthly statements.

Bank account statements:
Check with your financial institution to determine how far back they keep statements available to you.

Canceled checks:
If purchases are tax related, keep canceled checks seven years. If they are related to your house purchase, renovations, or big items that you purchased, keep them indefinitely. Canceled checks that support tax returns, such as charitable contributions or tax payments, should be held for at least seven years. By the way, banks are required to keep copies of checks for seven years.

Deposit, ATM, credit card, and debit card receipts:
Consumers should save credit, debit, and ATM receipts until the transaction appears on their statement and they have verified that the information is accurate. If it is for a big item and it has a warranty, save the receipt at least until the warranty is up. You might want to save it longer for insurance and/or IRS reasons, if there is a disaster.

Credit card contracts and other loan agreements:
Credit card contracts and loan agreements should be kept for as long as the account is active in case the consumer has a dispute with their lender over the terms of the contract.

Documentation of a purchase or sale of stocks, bonds, and other investments:
Investors should retain documentation of a purchase or sale for as long as they own the investment and then seven years beyond that time. Monthly retirement and monthly investment account statements can be shredded annually after being reconciled with the year-end statement.

Paycheck stubs:
Paycheck stubs can be shredded yearly after the income has been reconciled with a W-2 or other tax forms.

Utility or monthly bills:
Monthly bills should be shredded the year after being received by the consumer. This way, if it’s a power bill, for example, consumers can compare this month’s bill to last year’s bill for any major changes before shredding it.

Electronic Records:
Make sure you back up your data. Technology is always changing. Make sure you are using a method that allows the information to be retrieved.

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