How long should I keep important documents at home?
Documents to keep forever
Certain documents should never be thrown away: birth and death certificates, marriage licenses, Social Security cards, passports, wills, and deeds. Keep these in a fireproof safe or a safe deposit box.
Also keep records of major home improvements and large purchases as long as you own the item. These can affect taxes when you sell.
How long to keep tax-related papers
The IRS generally has three years to audit a return, but that extends to six years if you underreport income by more than 25%. Some experts suggest keeping tax returns and supporting documents for seven years to be safe.
Keep pay stubs for one year, then shred them once you've reconciled them with your W-2. Bank statements and credit card statements can be kept for one year, unless they support a tax deduction.
- Tax returns: 7 years
- W-2s and 1099s: 7 years
- Pay stubs: 1 year
- Bank statements: 1 year
- Credit card statements: 1 year (or 7 if tax-related)
- Utility bills: 1 year
What to shred and when
Shred any document with personal information, such as account numbers or Social Security numbers, before discarding. Invest in a cross-cut shredder for security.
For documents you're unsure about, a good rule is: if it supports a tax return, keep it for seven years; if it's a warranty or receipt for a minor purchase, keep it only as long as the warranty lasts.
Common mistakes
- Shredding tax records too soon—keep them for at least three years, preferably seven.
- Holding onto every utility bill and receipt, which creates unnecessary paper clutter.
- Storing vital documents in a shoebox instead of a fireproof safe or safe deposit box.
