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- Tax returns: The IRS has three years to challenge information in your tax
return and six years to conduct an audit based on unreported income. Keep tax returns and supporting
records, such as W-2s and 1099s, for at least seven years in a secure place, such as a lock-box.
- Investment statements for taxable accounts: Most brokerage firms and mutual
fund companies send annual statements summarizing the year’s transactions. Once you have
these, you should shred your monthly and/or quarterly statements with a confetti-cut shredder.
- Bank statements: Keep statements that back up information on your tax returns
for up to seven years. Other bank statements can be shredded after reviewing for errors or
unauthorized charges.
- Credit card statements: Keep statements for major purchases, like jewelry
or large appliances in case the statements are needed for warranty documentation. If you put
charitable contributions on your credit card, keep the statement for your tax records. Other
monthly statements can be shredded once you’ve reviewed them for errors or unauthorized
purchases.
- Pay stubs: While many people recommend saving these, it’s really a
mistake. Pay stubs contain everything an identity thief needs to open an account. Keep three
months of history only if you are planning to apply for a mortgage.
- ATM receipts: Shred all receipts after you check your bank statement for
errors or unauthorized charges.
- Canceled checks : Unless they are needed for tax returns or other documentation
purposes, canceled checks should be destroyed after one year.
- Retirement plan contributions: Keep records of contributions to non-deductible
individual retirement accounts, such as a Roth IRA, indefinitely. Without them, you may find
yourself paying taxes again when the money is withdrawn. Some financial institutions keep records
of IRA contributions, but it’s best not to count on it.
- Insurance policies, wills and other legal documents: These documents should
be kept indefinitely in a secure place, such as a lock-box.
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