There are some very good reasons to keep important financial documents, especially those that carry personal information on them. Beyond simply carting them around until you can find a paper shredder to destroy them properly, many actually have a benefit in keeping them around for a while or even permanently. Important financial papers need to be filed away for various lengths of time either in a manilla envelope, a shoe box, a file drawer or a fireproof safe. While some people will offer differing opinions on how long a receipt should be kept or proof of a bill pay, there are a handful that have definite expiry dates. When considering bank statements and records, you are free to do as you wish but you could very well regret getting rid of certain paperwork should a tax audit comes your way.

Bank and Credit Card Statements

The IRS may request an audit up to six years before the current year if they feel you have under-reported your income by over 25%. Otherwise they may go back only three years if they wish to assess a tax. For this reason keep anything related to tax or anything significant for seven years. Any statements that do not have tax on them or deal with any significant issue can be shredded after a year. If you receive monthly statements plus an annual statement, toss out the monthly one and retain the annual. Always mark closed accounts as such to save time in the future.

Loan Agreements and Credit Card Contracts

These are not saved for tax purposes but for your own safety. Keep them as long as you hold an active account in case you need to dispute or question anything concerning the terms of the loan or the credit card you were issued.

Canceled Checks

Similar to statements, if the checks have no long term tax, significance they can most likely be destroyed after a year. However, if they support a claim you made on your tax returns hold on to them for seven years from the calendar year listed on the check. These support roles would include charity claims, tax payments, donations and similar. Should you have written a check for a home sale or purchase, property improvements or renovations for any real estate you own or related receipts, then keep those checks indefinitely. An IRA’s non-deductible contributions statement should also be saved indefinitely.

Receipts

These can be thrown in the circular file, or even shredded, once you have a chance to verify information has posted to your account and is accurate.

Investments Documentation

If you purchase or sell any stocks, bonds or make other investments, retain the documentation for as long as you possesses the investment and at least seven years thereafter.

Lastly but perhaps most importantly, whenever you dispose of documentation that has your personal and sensitive information on it like Social Security Number, account information or financial information make sure it is shredded to prevent identity theft.