Home Business Inventory Software - How Long Should You Store Financial Records?
The answer to this question is… It depends.
Here are 3 lists of important financial documents, separated by the amount of time you need to keep them with you and handy, just in case:
Financial documents you should store for 1 year or less
You must review these when you receive them to make sure no unauthorized purchase has been made, and always keep the most recent one.
Retirement/401k plan statements
You should only keep the most recent annual and quarterly summaries. Ensure these match what appears in your account and shred the old statements.
You should review them to make sure they are accurate, but it is not necessary to keep them, unless you want to compare year after year usage numbers.
Credit card bills
After you have reviewed your bill to make sure there are no errors, you can shred them; or you can request that these be sent online, where you can store them forever.
Store this for a year. Keep them and compare them against your W-2; if it does not match, go to your employer and ask for a change to your W-2. If everything is fine, you can shred them.
Hold on to the most recent one, the older ones don’t apply anymore.
Financial records you should store for 7 years
If you believe you are due a larger refund, you have three years to file an amended return, and the IRS has three years to audit you if it thinks you have made a mistake.
Equally, the IRS has six years to audit you if it believes you reported less income, and there is no time limit if it thinks you filed a fraudulent return.
If you have lost your old tax returns and want a copy to have peace of mind, you can ask the IRS for a copy of past tax returns.
You can get a tax return transcript without cost in around two weeks when you call 1-800-829-1040, or you can order it by mail using Form 4506T. This transcript contains almost everything there is in your Form 1040/1040A/1040EZ.
As soon as you receive it, scan it and store it online with home business inventory software, to make sure you never lose it again.
Financial documents you should store forever or indefinitely
Life insurance policies
It is obvious why these can’t disappear, but in any case, you can shred them once they expire.
Let someone else shred these when you expire…
Keep these indefinitely. If you have made a nondeductible contribution to a traditional IRA, save the documentation forever, because it proves that you made such a contribution and already paid the corresponding taxes.
It is the best way to make sure you don’t pay taxes twice.
Keep the statements that record purchases until you sell the security, in order to be able to document any gains or losses.
You must keep them for the life of the loan and shred them only after you have paid it off and have the title in your possession.
Store all the bills you have for improvements until you sell, because any improvement increases the cost basis of your home, and keep them for 7 years after selling, since these become tax documents.
Save every other expense bill related to a sale, for example, agent fees and lawyer, to increase the cost basis even more.
Store everything that has to do with a major purchase or improvement for insurance reasons, including 90-day purchase protection from credit cards. Anything else, you can shred.
Be wise and change any paper bonds you have into electronic bonds at TreasuryDirect.gov, or else, you will have to keep the paper for the life of the bond.
It is easy to see the huge amount of paper and storage space that keeping all these documents requires; for many people it’s just a practical impossibility and a source of much distress to think about organizing and maintaining such a paper system.
This is why in general, and if you have a choice, prefer electronic or paperless statements and a home business inventory software to store it all. This is an eco-friendly practice and it saves you a lot of time.
PDF files do not need scanning; thus, do the planet a favor, save time, and choose electronic statements.
Storing documents electronically and online actually makes it unnecessary to think about how long you should keep your financial documents. It is very inexpensive to store data; thus, you can save crucial documents forever.
If you don’t feel completely safe using electronic documents, besides keeping an electronic copy of them, you can download and store these statements forever through safe online home business inventory software, since you never know when you may need them in the near or distant future.
AssetWatch is a home business inventory software company whose mission is to empower you to better organize your everyday life and to help you minimize the loss and stress during critical times.
We are certain that you will be able to see how well we understand what you need in terms of document, financial, and asset security, and that we even go beyond. This is because our founder and chief executive officer, Mike Batesole, has experienced this need firsthand.
Contact us with your questions and comments and you will receive an answer promptly, or read our FAQs page to confirm that we have a direct and accurate answer for your most pressing questions about financial and home inventory safety.
We exist to help you empower yourself… and to give you peace of mind, take advantage of the opportunity!