How Long to Keep Financial Documents and Statements?

If you’re like many of us, you’ve got a few boxes of financial records that you’d probably like to get rid of. From old bank, credit card and loan statements to tax records, keeping these boxes isn’t fun and takes up room you could use for storing precious mementoes. It’s possible that you may be able to get rid of some of these papers, assuming you’ve held onto them long enough.

Tax Forms and Supporting Documents
The IRS recommends keeping a copy of your filed returns along with supporting documents (such as W2s, receipts for deductions and 1099s) for at least three years. However, if you’ve claimed a loss for a worthless security or bad debt, they recommend keeping your records for that tax year as long as 7 years after filing. If you own rental property or a business and claim depreciation, some tax advisors recommend keeping tax returns as long as you own the asset you are depreciating. Before you shred any tax returns, be sure you match up the numbers against your social security earnings report to make sure the income figures match.

Bank, Loan and Credit Card Statements
Unless you need them for tax purposes, you can shred bank, loan and credit card statements after a year. If you do need them for tax purposes, attach them to your tax return instead of keeping them in a separate file.

Investment Statements
Most investment statements provide an annual statement December 31st of each year which shows the transaction history for the year. For any investments purchased prior to January 1, 2011, you will want to keep these annual statements for as long as the account is open to track cost basis. Once the account is closed and the gain or loss is reported on your tax return, you should hold on to it for seven years and file it with your tax papers for the year you reported the sale. For purchases made after January 1, 2011, the investment companies are required to track the cost basis and it is no longer necessary for you to hold on to your investment statements.

Better Safe than Sorry
While you can technically get rid of loan and credit card statements after a year, if you’ve paid off the debt you may want to hold onto the last zero-balance statement indefinitely. That way, should your full repayment ever come into question, you have proof that if was repaid.

Receipts for big-ticket purchases should also be kept, even if you didn’t take a tax deduction for them. The reason you want to hold onto these is so that you have documentation to provide your insurance company should you suffer a loss.

Other documents you may want to hold onto forever include original loan documents, divorce decrees, insurance policies and custody agreements, deeds and titles.

Keeping Digital Copies
If you’re ever concerned about shredding a document once you’ve held it to the recommended date, but you still want to free up some space in your attic or storage facility, consider having the document scanned so that you can keep an electronic copy in your computer. Just make sure to create a backup so that you have another copy of the files should something happen to your hard drive. You may want to consider placing the backup files in a safe deposit box or fireproof safe.

At Kramer Wealth Managers, we believe that having organized finances can help you stay on your WealthPath. We can help you decide when to shred documents and when to make an electronic copy. Contact us today.

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Adrianna Rocha

Client Relations Representative

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240-439-6889 VP
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Adrianna Rocha joined Kramer Wealth Managers in 2021.

Adrianna is responsible for client experiences and service. As part of the customer service team, she strives to help and provide top-notch service to our clients. As part of her role, she communicates with clients through videophone, schedules client meetings, prepares and processes forms, and gathers information for our advisors.

My clients’ accomplishments are also my own. 

Adrianna Rocha graduated with a Bachelor of Arts in Communication Studies from Gallaudet University in 2017. Before she joined our team, she worked in the customer service industry for nearly a decade. She excels in human-to-human relations and takes pride in not only her own accomplishments, but her clients’ as well. Adrianna enjoys chatting about her slight obsession with dogs, houseplants, essential oils, and food: especially Mexican food! She is also a proud fur-mama to her beautiful Aussie-mixed pup, Ziva.

Adrianna is not registered with FSC Securities Corporation.