It’s spring! And the perfect time to clean your desk and file cabinets. But with that comes the question…
What Documents Can You Dispose of and What Should You Keep?
Here are some basic guidelines to help you get started:
As a general rule, you should keep federal income tax returns, along with any supporting documents, for at least 7 years. The IRS has more in-depth guidelines on its website as well.
Still, most of the limitations are based upon the period in which you can amend your return for a refund or that the IRS can assess additional taxes. In most situations, it’s best to err on the side of caution and keep your documents for the most extended period of recommendation by the IRS.
The length of time to keep these documents is based on the type of contract. At a minimum, you should keep a contract and any supporting documents for the time you or the other party could file a lawsuit.
This is determined by the contract terms and the laws of the state where you live. Each state has a statute of limitations that bars a party from filing a lawsuit after a specific period. Once that period has passed, it is likely okay to dispose of the documents.
Bank and Credit Card Statements
According to the FDIC, you should keep your credit card and bank statements for one year unless they are relevant to your tax returns, in which case they should be kept for seven years.
While you may think you can dispose of these documents once the accounts are closed, that isn’t necessarily the case. It would help if you kept these account statements for the life of the investment plus an additional seven years due to tax purposes.
How do I Properly Dispose of My Documents?
Once you determine what documents you can dispose of, it’s essential to dispose of them safely. Many of the above documents contain sensitive information like bank accounts and social security numbers.
Ideally, you should shred the documents, but if not, you can burn them in a safe place, such as your fireplace, fire pit, or BBQ grill — but be sure to take safety precautions.
If you don’t have a shredder and aren’t comfortable burning them, consider having an external company destroy them safely. Although there is a fee for this, you will have the peace of mind of knowing your sensitive information was disposed of efficiently.
Finally, online storage for these documents is an excellent option to help reduce paper clutter while keeping a copy of the documents for as long as you need. Just make sure you do not need the originals for anything.
While the above guidelines aren’t set in stone, they should provide some basic guidelines to help trim down the paper clutter and clear out your file cabinets.
Remember that if in doubt, you should always err on the side of caution. Moreover, there are many documents not listed above that should be kept indefinitely.
Do you Need Help With Your Important Documents?
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