Which Financial Records Should You Keep?
Good financial records are very important … especially come tax time. But if you keep every snippet of paper forever, you'll need to put an addition onto your house!
Let's do some maintenance and get rid of the paperwork that's cluttering your life.
Before we talk about what you can throw out, let's look at papers you should stash away in your permanent file. Keep the following documents forever:
- Records that relate to your home (mortgage, deeds, capital improvements, etc.)
- Documents showing non-deductible and deductible IRA contributions
- Tax returns and checks used to pay taxes or to substantiate deductions.
Once those papers are safely tucked away, grab your trash bag because here we go!
TYPE OF RECORD |
THROW OUT AFTER… |
Accident reports/claims |
7 years |
Back-up tax paperwork |
10 years |
Bank reconciliations |
1 year rolling |
Bank statements |
3 years |
Brokerage statements |
Year end only |
Contracts, notes and leases (expired) |
7 years |
Credit card statements |
1 year rolling |
Insurance policies (expired) |
3 years |
Mutual fund statements (after sold) |
3 years |
Paycheck stubs: normal |
1 year |
Now maybe your home will be big enough for you, your family and your financial records!
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Child Savings AccountsWhen opening a savings account for your child, make sure their Social Security number is used as the account's tax identification number. That way, as long as your child is under age 14, interest earned will be taxed at your child's lower tax rate, not at your tax rate. This rule holds true as long as your child earns less than $1,300 a year in interest. |
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