(IMHO or GQ? I suppose there is a factual answer, so GQ)
The wife and I have finally set up an office area in the house, and I’ve been tasked with organizing the desk. We have been holding on to old bills, which we notate with how and when we paid it. ISTR that taxes should be held for at least 7 years, but what about credit card, mortgage, and utility bills?
There are a number of sites on-line (including this CPA site) that detail document retention strategies. That site also has links to the IRS PDF document retention brochures for personal and business docs.
You should hold onto tax returns for seven years at a minimum simply to be able to defend against audits.
However, I recently read some financial advice (sorry, no cite) that advocated what I have always followed–you should hold onto your tax returns forever (i.e. until you and your spouse pass away).
Why? Tax returns are great things to have if you ever run into a dispute down the line regarding your earnings for Social Security, etc.
They don’t take up that much room, either, especially if you just keep a copy of the return itself.
Senator Helms, IIRC, contested a property tax bill. He produced a 46 year old receipt.
When my father passed away, we found his tax returns back to 1952 or so… and an apartment lease he had in 1959. 
Nice stories, guys, but I’m trying to avoid my latent hoarding/ unorganized mess tendencies.
I go the other route and get rid of almost everything within a month or so. In this electronic age, you get statements reproduced for almost anything. The clerk on the phone isn’t going to care what you plan to do with it. Reinforcing this point, we don’t get any Bank of America statements either. They are on-line and you can print them yourself and don’t ever have to worry about keeping copies around. Paper statements are quickly becoming an antiquated concept as is balancing your checkbook. However, tax returns could be useful some other purposes like loans so I wouldn’t completely discount those.
I recently had to produce a 2004 tax return within 24 hours. I was in the middle of a move (buying a new place - imagine that!) and my paper records were hopelessly buried.
I called the TurboTax guys and within 15 minutes had an e-mail in my hands that contained a PDF of my 2004 return.
So…not a representative sample, but I’m more of the “shred it now” school. Of course, I don’t plan on running for the Senate in 20 years, so I can be foolish!
Then I suggest my Indentured Bilge Rat Strategy. Use two drawers. Place all new paperwork into the top drawer. Every thirty days place the contents of the top drawer into the bottom drawer after throwing the contents of the bottom drawer into the trash.
If it’s important they’ll get back to you. And if it’s really important they’ll have copies.
If you’ve got a scanner and .PDF software it may be worth getting a detachable HD and just scanning your old files in.
A couple of large HDs (one for you, one for the wife) should keep copies of pretty much any paperwork you may need to conceivably retrieve at any time in the future, then it’s just a matter of reprinting and you’re good to go.
Heck, the hard drives don’t even have to be that large. I see 500 GB external HDs on sale at Fry’s every week. I have a ton of games, videos and pictures on my PC and I still have less than 500 GB total.
You could probably get a 250 GB external HD that would store every document you would ever produce in your entire life for about $150.
There’s no point in saving a recurring bill after the payment is recorded on the next one. You paid it, they agree with you, what more can go wrong later? UNLESS the bill is for something tax deductable, in which case you need to keep it for as long as you keep the tax return.
People above talk about keeping tax returns for 7 years, or forever. But you must also keep 100% of the papers that support the tax return. If IRS audits your 2005 return & questions your employee business deduction, or your home mortage interest deduction, and you don’t have whatever papers you used to compute that number, well it becomes zero in the new-and-improved post-audit return. Can you say “failure to substantiate; deduction disallowed?”
I would not assume you can get copies later from whoever gave you the magic paper. If the company hasn’t been sold, bought, merged, shut down, etc., and you can remember who it was, you ought to be able to get copies. But I wouldn’t bet my tax return on that. e.g. Many people have refi-ed their house 2 or 3x in the last 7 years. Do they even know who they were paying interest to in 2002? Does that company still exist?
If you have any investments, you need to keep papers proving their basis until they are sold. You only pay taxes on the gain, but if you have no idea what you paid for those 100 shares of XYZ you bought back in 1999, well …
My personal technique is to save everything throughout the year, all filed by vendor. When I do my taxes in March I go through all the papers. Anything that supports the tax return gets saved with it, anything which supports basis for unsold investments gets returned to the files & everything else goes to the shredder.
Thanks for the tips. Might have to setup that scanner we got from her parents.
I just keep the tax stuff too. Each year I start a folder where any info I need to file taxes is kept, then I file it all along with a copy of the return. All utilities and stuff I can pay and view online I don’t bother to keep. I do have a folder that has one statement from each, just so I have info like my account numbers handy in case their website is down or my computer crashes or something. Also, when I pay off a debt, I keep a statement that shows I have a zero balance. This has come in handy once when we were disputing an error on my husband’s credit report.
I also keep a year of bank statements. I can only see a few months back or so online, and sometimes you need them to prove income or that a check has cleared or something.
There are lots of documents that should be retained that have nothing to do with taxes. Wills, for example, contracts, or documents relating to real estate transactions.
Tax Returns have a 3 year Statute of Limitations. I’d keep the actual return for a couple years longer, but toss all supporting docs every three years. 3 years from the date filed/date due whichever is later. 2005 tax return (due 4/15/06) filed 2/14/06> 4/15/09. 2004 tax return (due 4/14/05) filed 10/15/05> 10/15/08. Got it?
Yes, this means robby is wrong about his 7 years.
Keep records of real estate transactions at least 5 years after you dispose of the property. Death records for 10 years.
I keep Credit card bills for one year. That’s just in case something breaks and I need to show when I bought it.
Actually, I wasn’t stating the “seven years” as gospel. That figure came from the OP that I was quoting and responding to. Personally, as I stated above, I hold onto all of my tax returns.
Secondly, it depends on what they are auditing you for. There are many exceptions to the three-year statute of limitations. For example, if the IRS thinks that you substantially underreported your income (>25%), they have six years from the time that you file to audit you.
Next, if the IRS believes you are guilty of fraud (which the IRS gets to decide is the case or not), there is no statute of limitations.
Also, for any return that you are concerned about having an audit defense, you should keep all of your supporting documentation.
Finally, as I stated before, tax returns have other purposes than defending yourself in an audit. If you ever end up in a dispute regarding past earnings and government withholdings (such as for Social Security or Medicare), your old returns will be extremely helpful.
Cite (including lots of info pertinent to the OP’s questions):
Spend the cash and buy a scanner. It’s so much easier to store electronic copies.
We’re in the process of creating and scanning our own “footballs.” (Similar the nuclear football.) It will contain a hard drive of the backup copies of our computer data and scanned documents, including all tax returns, mortgage documents, important receipts, car titles, insurance papers, wills, financial documents, digital video and static images of our home and belongings, etc., along with “some” hard copies of documents.
We will keep one football at home and an identical copy in a secure location off-site. Both will be updated once a month.
Ask me sometime why we’re going to all this trouble.
I think your location speaks for itself but raises some deeper issues.
I was pretty much considering this same question recently. Expanded to how long to keep payroll check stubs and other non-bill financial paperwork. I’ve got a couple of years worth stacked on the dresser and the SO was making noises about thinning the mess.
Why yes, I do need that Columbia House DVD Club catalog from 2003. Now put it back where I had it.