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How Long Should You Keep Financial Records For?

Financial RecordsEven though nearly everything has gone digital, there are some records and financial documents that you'll want to keep around in their original form. Now that tax season is here, many people will be gathering their necessary tax documents and information, which may involve deciding which financial records to keep and which to throw out. No matter if you're in the trucking, construction, healthcare, or any other industry, it's important that you know the date of expiration for financial record keeping.

Put It on a Cloud

While you're putting your birth certificate, citizenship papers, immunization records, and the like into a fireproof safety deposit box, you'll also want to make sure you make a list of your current financial accounts, lawyers, insurance policies, accountant, and assets and that you update this list as needed. While not an actual financial record, it's also a good idea for you to take pictures of the most essential and expensive items in your office or home and store the images on a cloud. If your business is ever robbed, burned, washed away in a flood, or otherwise ruined, you'll have less of a headache filing an insurance claim.

For the Long Haul

It's also a good idea for you to hold on to your W-2s and tax returns until you're ready to retire. While that sounds like a long time to keep the tax return from your first job, doing so can save you a lot of time and frustration in your golden years. Real estate and investment documents that you'll want to keep in your possession for at least seven years after you sell them include:

  • Records and receipts for home and property improvement projects
  • Paperwork for leasing a rental property or buying a home
  • Retirement account statements you receive at the end of the year
  • Taxable brokerage statements you receive at the end of the year

Short ‘n' Sweet

There are some financial records that you won't have to worry about keeping up with for very long. Such records include old insurance policies, bank account statements, paperwork for vehicles that you sold over a year ago, and employment pay stubs and records that have been verified as a match on your 1099 and W-2 statement. Even so, it's probably best to keep these types of documents for at least a few years; 2290tax.com recommends keeping any financial-related documents for at least 5 years.

Once you've gathered the financial records you need to keep, scan them so that you'll have an electronic copy and consider storing them either on an encrypted hard drive or with a backup service like Carbonite. Before you throw away those hardcopies, make sure you keep any that have an original seal or signature on them.

Rather than keep each and every financial record that you've ever received, save yourself some time and space with these tips.

Do you have any questions? Please ask.