Q: I’m trying to do some house cleaning and part of that is getting rid of some old papers I’ve been saving. But I’m not sure what documents are OK to shred vs. which I should keep. Do you have any general guidelines?
A: Many of us can benefit from a good document purge from time to time. Of course, we need to be mindful of what we shred, and how we keep our important documents organized. Here are some tips to help you get started.
It’s easy to throw up your hands in exasperation when it comes to filing papers and documents at home, and you’re likely tempted to shred everything to be done with it. Still, keeping good records will reduce clutter, prevent identity theft, and reduce stress. No more searching for needed paperwork!
The principles of good record management for businesses also pertain to personal recordkeeping. They are accountability, transparency, integrity, protection, compliance and accessibility. Consider the following principles (and time frames) when deciding what to keep or shred for your document management plan.
Documents to Shred Immediately
The following are documents that you should shred immediately to protect your personal information:
- ATM receipts and reconciled paper bank statements
- Old credit card bills (after charges have been verified)
- Paid utility bills
- Expired warranties
- Canceled and voided checks
- Junk mail
- Store receipts (after the return period is over)
- Any statement with your credit card number, social security number, phone number or other personal information
Documents to Shred After 7 Years
While you should shred some documents immediately, some should be kept for about seven years to refer to their information.1
Here’s a list of what to shred after seven years:
- Paperwork related to an estate settlement or a loved one’s death
- IRS tax returns (the IRS has three years for an audit, which can be extended to six years if an investigation is warranted)2
- Tax-related receipts
- Other tax forms and tax records
- W-2s and 1099s
- Investment records (shred them seven years after you’ve sold the securities or closed the investment accounts)
Documents to Shred After 10 Years
You should keep some documents for reference for up to ten years, including:
- Medical records, such as hospital discharge papers, prescriptions, and medical tests
- Receipts for home repairs (keep receipts until you sell your home and need them to calculate potential capital gains taxes)
- Purchases with a warranty (i.e., major appliances)
Documents You Should Never Shred
Of course, there are some important documents you should never shred, such as:
- Legal records
- Birth certificates
- Social security cards
- Divorce decrees
- Death certificates
- Wills or living wills
- Marriage licenses, domestic partnership agreements, prenup agreements, etc.
- Passports
- Insurance documents
- Mortgage documents
- Vehicle purchase or lease documents (until you sell the vehicle)
- Stock and bond purchase documents (as long as you own them)
In addition to the lists above to help you decide which documents to keep or shred, the Federal Emergency Management Agency (FEMA) has compiled an Emergency Financial First Aid Kit for paper documents to have handy in an emergency.3 This kit includes all the documents on the never shred list above. Storing these documents in a loose-leaf binder with plastic sleeves is an excellent way to keep them easily accessible.
Once you know what documents to shred and systematically file the rest, you’ll be ready to file taxes, manage your budget, and easily locate the required papers in case of legal actions or audits. You can rest easy, knowing your paperwork is all in order—safe and secure.
Jeremy R. Gussick is a Certified Financial Planner™ professional affiliated with LPL Financial, the nation’s largest independent broker-dealer.* Jeremy specializes in the financial planning and retirement income needs of the LGBTQ+ community and was recently named a 2023 FIVE STAR Wealth Manager as mentioned in Philadelphia Magazine.** He is active with several LGBTQ+ organizations in the Philadelphia region, including DVLF (Delaware Valley Legacy Fund) and the Independence Business Alliance (IBA), the Philadelphia Region’s LGBT Chamber of Commerce. OutMoney appears monthly. If you have a question for Jeremy, you can contact him via email at [email protected].
Sources:
1 https://www.identityguard.com/news/to-shred-or-not-to-shred-tax-season-preparation
2 https://www.irs.gov/businesses/small-businesses-self-employed/irs-audits#
3 https://www.fema.gov/sites/default/files/documents/fema_effak-toolkit.pdf
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.
Jeremy R. Gussick is a Registered Representative with, and securities and advisory services are offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.
*As reported by Financial Planning magazine, June 1996-2022, based on total revenues.
**Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2023 Five Star Wealth Managers.