Managing Receipts

How Long Do I Need to Keep This Receipt?

Purging your wallet or purse from receipts collected over the week is part of our norm. After purging these receipts from our wallet they tend to collect in one or multiple areas in our home. Some papers are important enough to keep around for the long haul and some can be pitched immediately. To help you stay organized, we've prepared this cheat sheet of documents you should keep and for how long. 

Credit card receipts

Keep until you receive your statement online. Check the receipts against your statement to make sure transactions were recorded accurately, then shred the receipts. You may want to hold on large expenses due to product warranties or purchases that may be needed for insurance claims. 

Bills 

Keep bills for big purchases like appliances, cars, jewelry and electronics in an insurance file for proof of value. Otherwise you can destroy bills after one year. Medical bills can be tossed once you are able to confirm your health insurance has paid them. An exception would be if you are accumulating towards a deductible, in which case you will need to keep for three years for tax records. 

Paycheck stubs

Keep for one year; you can shred these once you receive your W-2 and verify that the information is correct.

Cancelled checks

Permanently file anything related to taxes, business expenses, home improvements and mortgage payments. Otherwise, you can shred these after one year.

House/condominium records

Keep all documents related to your home's purchase price and any permanent improvements you've made, like adding on or remodeling. These records can be used to document capital gains when you sell your house. After selling, you need to keep records documenting expenses incurred from selling and buying the property for six years after the sale.

Tax returns

Keep these for seven years. The IRS has three years from your filing date to audit you if it suspects good-faith errors, and six years to challenge your return if it thinks you under-reported your gross income by 25 percent or more.

Cut down on the paper mess by signing up for online banking. You'll be able to view cancelled checks online and if you sign up for paperless statements that's one less document you’ll have to file each month.

References:
Bankrate - How Long to Keep Financial Records

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