Issue Date: April 8, 2007
Toss it or file it?
Some financial records require a long shelf life, but others are strictly short-term.
Save federal tax returns indefinitely.
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Is paper clutter taking over your desk, files, even your dining room table? If you're among the millions of Americans rooting through envelopes and desk drawers to meet your April 17 federal tax filing deadline, you may be feeling document overload right now.
In fact, you may be keeping more financial documents than you really need, says Barbara Weltman, an attorney in Millwood, N.Y., and author of J.K. Lasser's "1,001 Deductions & Tax Breaks 2007" (Wiley, $17.95). Use her checklist below to see what you should keep and what you can toss. But be sure to discard carefully. Identity thieves love nothing more than trash bags full of financial documents. Instead, invest in a personal shredder -- some cost as little as $20. Or, rip up your papers and throw them out with coffee grinds and other wet trash.
If you keep some files electronically, such as bank and credit card statements, print out and file the documents you need for tax purposes, then store whatever else you want to keep in well-titled folders on your computer. Then back up that information on a CD or USB flash drive in case your hard drive crashes. Store the CD or drive in a safe place to avoid loss or damage.
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What to do with your financial papers
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| Document |
Save |
When to toss |
| Pay stubs |
For the calendar year |
After you receive and check your W-2 for mistakes or omissions |
| Tax returns |
Indefinitely |
Almost never. The IRS can come after you at any time if there's reason to believe you didn't file taxes. |
| Any receipts you use to prove tax deductions |
For the calendar year for 401(k)s or traditional IRAs. Save Roth IRA info until retirement. |
File your annual statement, and throw away quarterly statements. (Check that you have been credited with all contributions and any company matches due.) |
| Credit card receipts |
Until you receive your monthly statement |
Immediately after you check the receipts against the monthly statement for errors |
| Insurance policies |
As long as the policy is in effect |
Throw out the old policy, and replace with any new one. |
| Social Security statements |
Until you've checked FICA and Medicare contributions |
In a year. Keep the current one on file until you replace with the new year's version. |
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