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When to Keep, Shred or Scan 3 Types of Documents
Depending on the date, you may need to hold onto these important papers
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There’s a fine line between holding on to important financial and medical records and hoarding. You don't have to keep those canceled checks from the 80s, but you should dispose of them safely. Here’s when to get rid of them, and suggestions of ways to do so safely:
1. Tax returns
Don’t plan on running for president? Hold on to your old tax returns and supporting documents for three years, counting from the return’s due date or the date you filed (whichever comes later). That’s the window the IRS has to audit you to catch any mistakes, explains Mark Steber, chief tax officer at Jackson Hewitt.
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If you’re self-employed or have a complicated return, though, double that to six years, which is how much time the IRS has to audit you if it suspects you’ve grossly underreported your income.
However you earn your money, check your My Social Security account before you shred so you can verify that Social Security has accurately recorded your earnings for each year. Having your tax returns in hand will make it easier for you to get your figures corrected.
Do you own your home? Keep financial records related to real estate for seven years after you sell, the IRS advises. By using home-improvement receipts, you can potentially reduce any taxes you might owe on the sale.
2. Banking and investment account paperwork
If there’s a possibility you or your spouse will be applying for Medicaid for nursing home coverage, in most cases you’ll need to produce five years of financial records — banking, credit card and brokerage statements. That’s so the government can look for any asset transfers that might delay your eligibility.
Otherwise, keep banking and financial statements for a year, except those issued for income-related purposes to provide the IRS with a record of tax-related transactions, says Jennie Gift, vice president of member services at the International Secure Information Governance & Management Association.
Your bank or credit card issuer may have statements going back several years online, she adds; if not, download each new statement and save it in a password-protected folder on your computer.
Own stocks or bonds? Keep records of any purchase for six years after you file the return reporting the sale of that security — again, in case the IRS thinks you’ve underreported your gains.
And dump that shoebox of old canceled checks, since electronic versions of them are retained by your bank or credit union, says Bankrate senior economic analyst Mark Hamrick.
3. Medical records and bills
Err on the side of caution here. Harlan Krumholz, a cardiology professor at Yale University and founder of the Center for Outcomes Research and Evaluation, recommends that people retain all medical test results (such as blood test results and X-rays) indefinitely. “Normal or not, the information may be useful in the future in their own clinical care or for research,” he notes. Particularly important are surgical reports, hospital discharge summaries and treatment plans for major illnesses. Put these in a password-protected folder on your computer or in a secure cloud-based account so that you can easily share them with future health care providers. Keep immunization and vaccination records permanently, too — they may be required for certain jobs or for traveling abroad, and you shouldn’t rely on your doctor’s office to store them.
Hold on to proof of payments to medical providers for six years with the relevant return, Gift advises, to show the IRS that you’ve made legitimate health care deductions.
How to shred
Proper disposal of documents with your personal financial or medical information can help prevent you from becoming a victim of identity theft. Take bags of these important papers to professionals or do it yourself.
AARP events. Document-shredding events are organized by AARP in different communities throughout the year. Check here to find a local shred event.
Retailers. Staples, FedEx and UPS stores will shred for you; $1.49 and up per pound of paper.
Buy your own shredder. To dispose of documents at home, look for shredders described as confetti, crosscut or micro-cut; $35 or more.
This story, originally published in 2019, has been updated with new information about AARP shredding events.
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