When to Shred Documents (and When to Keep Them)

Do you feel like paperwork is taking over your desk, your filing cabinet, or your entire home? Or perhaps you’re doing your taxes for the year and you’re wondering when to shred documents or save them in case of an audit or for future tax filings.

But before you get too shred-happy, be sure you know which documents are important and which you can get rid of. For some questions, like “How long should I keep bills before shredding?” the answer is “It depends,” on the type of bill, whether you need it for your taxes and more. You should also know how long you should keep your tax returns before shredding them, as well as whether or not you should shred receipts.

We’ll help you be prepared this season with our tax day deals – and our helpful advice on when to shred documents, and when to keep them.

How Long Should You Keep Your Tax Returns Before Shredding Them?

This is one of the most frequently asked questions at this time of year. Tax records are one of these that can pile up easily, but before you throw out those old W-2s, find out how long you should keep your tax returns before shredding them.

To play it safe, hold on to tax records and supporting paperwork for at least seven years. In most cases, you have three years to amend your return and the IRS has three years to audit you. However, there are some exceptions. For example, if the IRS finds a major discrepancy, like 25 percent or more of your income has been unreported, then they can audit you up to six years back. Also, entities other than the IRS, like creditors and insurance companies, may want to see tax documents that go further back, as well.

A good way to save your tax returns is to scan them into your computer. If you use tax software, it may also save your returns in the cloud – but you should still keep a hard copy or a scanned copy on hand for seven years. Check out our tax software deals to see which one might be right for you. We have TurboTax coupons, H&R Block coupons and more.

Still have the urge to purge? Here’s our easy guide to what you can safely shred, what you should save, and how to properly store and back up your files.

Save As Needed

Person sorting through paperwork in a filing cabinet

Should you shred receipts? What about bills or bank statements? The answer is that it depends, for example, on what you’re claiming on your tax return and whether you’ll need them as proof of a purchase.

  • ATM and deposit receipts: Shred once you’ve compared them against your monthly bank statement.
  • Monthly bank statements: Keep statements for one year, after that hold on to the annual statement and shred the rest (unless a statement has proof of a tax deduction).
  • Utility bills: How long should you keep bills before shredding? If you’re claiming a home office deduction, you should keep utility bills for three years. Otherwise, keep them for one year, then shred them.
  • Credit card bills: Once they’ve been paid, shred them – unless you need them to support a tax deduction, like a charitable donation or childcare expense.
  • Monthly investment statements: Hold onto annual statements and your most recent monthly statement, the rest can be shredded.
  • Pay stubs: Shred all of last year’s pay stubs after you’ve compared them against your W-2, which should have arrived in January.
  • Insurance policies: Keep policies and statements until you renew or get a new policy, then discard the old paperwork.
  • Receipts: Most receipts can go to the shredder. But, you should hold on to receipts if they were for a big purchase or could be needed to prove a deduction on your taxes.

Save for Seven Years

Now you know when to shred documents like receipts and bills – but what about more important papers that you need for your taxes? You should keep the papers in the list below in a secure location for a minimum of seven years. The IRS also recommends scanning the paperwork so you have a backup electronic version. Store these records on a portable storage device that you could easily grab in the event you needed to evacuate your home.

  • Tax returns
  • Receipts (needed to prove claims made on tax returns)
  • Annual statements (bank, credit card, insurance, etc.)
  • Charitable donation records and written acknowledgment from charities
  • Mileage logs (if deducting miles driven for business or charitable purposes)
  • Retirement account info & statements
  • Annual investment statements
  • Proof that you filed your tax return – email confirmation if filed electronically or a certified/registered mail receipt from the post office
  • Proof of miscellaneous income (if it applies) – unemployment, gambling, alimony, jury duty, hobby incomes, prize money, etc.

Save for a Lifetime

Paperwork stored in a locked safe with door open and key in lock

When to shred documents like military papers, mortgage documents and other major paperwork? The answer is never. There are certain items you want to have original copies of tucked away safely. Keep them in a fireproof safe and/or a safe deposit box. If you store your “forever” documents in a safe deposit box, make sure you keep a copy of them at home. These are the documents you should never shred.

  • Loan and mortgage documents
  • Estate paperwork (wills, trusts, health proxies, etc.)
  • Birth certificates
  • Death certificates
  • Marriage license
  • Military service records
  • Social Security cards
  • Car titles (until you sell or get rid of the car)
  • House deed
  • Household inventory
  • Life insurance policy

There’s nothing like a whirlwind of documents and records to make you want to go on a shredding spree. But before you do, you should know when to shred documents and when to keep them – plus when and how to scan them. It could save you a lot of trouble down the road.

When to Shred Your Tax Records & Other Documents | thegoodstuff


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