How long should you keep your financial records? Find out now!

In today’s digital world, it’s easier than ever to store receipts, tax returns, and bank statements. But that leads to an important question: how long should you keep your financial records?

Whether you prefer paper files or cloud backups, knowing what to keep (and for how long) can protect you from IRS audits, identity theft, and future financial confusion — without cluttering your desk.

Here’s a breakdown of which records to keep, for how long, and what you can safely toss.

Why should you keep financial records?

Keeping accurate financial records helps you:

• Support tax filings in case of an IRS audit
• Dispute billing errors or unauthorized charges
• Track deductible expenses and business costs
• Verify loan applications or credit history
• Prove income for benefits, mortgages, or student aid
• Provide documentation during legal or financial disputes

Whether it’s a paper folder or a password-protected cloud system, organization is key.

How long should you keep tax records?

The IRS generally has three years to audit your tax return — but there are exceptions that may require you to hold onto records longer.

That’s why most tax experts recommend keeping your full tax returns and supporting documents (like W-2s, 1099s, and receipts) for at least 7 years — just to be safe.

How long should you keep bank and credit card statements?

These documents help you verify transactions, claim deductions, and track spending. Here’s what to do:

• Bank statements: Keep for 1 year, unless they’re needed for tax or legal purposes. Many banks keep online records for up to 7 years, so you can download them when needed.
• Credit card statements: Keep for at least 60 days, longer if you’re disputing a charge or using them to track expenses for taxes or insurance.
• Statements with tax-related purchases (e.g., medical bills, work expenses): Keep for 7 years.

Tip: Go paperless and download PDFs of your monthly statements to keep them organized and searchable.

How long should you keep utility and phone bills?

• 1 year, unless you’re using them to prove home office or rental expenses for tax deductions.
• After that, they can usually be shredded — unless there’s a dispute or reimbursement involved.

Pro tip: If you rent your home or travel often for work, keep copies of utility bills in your name to verify your address for applications or audits.

What about pay stubs and employment records?

• Pay stubs: Keep until you receive your W-2 and confirm the amounts match. Then you can safely discard them.
• W-2 forms: Keep for at least 7 years, or permanently if you want a record of your earnings history.
• Employment contracts and benefits documents: Keep as long as you’re with the company and up to 7 years after leaving, especially for retirement planning or legal matters.

Mortgage, insurance, and investment documents

These should be kept much longer than day-to-day statements:

• Mortgage documents: Keep all documents until the mortgage is paid off, plus 7 years in case of tax implications or disputes.
• Home improvement records: Keep until you sell the home; they can affect capital gains taxes.
• Insurance policies: Keep as long as the policy is active, plus a few years after in case of delayed claims.
• Investment records (brokerage statements, trade confirmations): Keep for 7 years after you sell, especially for capital gains tracking.

Receipts and medical bills

These vary based on how you use them:

• General receipts: Keep only until you confirm the charge on your card or return period ends.
• Tax-related receipts: Keep for 7 years (medical expenses, donations, business purchases).
• Medical bills: Keep for 1–3 years, or 7 years if you’re deducting them on taxes or they relate to insurance disputes.

Documents to keep forever

There are a few financial records you should never throw away:

• Social Security cards
• Birth, marriage, and death certificates
• Passports
• Wills and power of attorney documents
• Retirement plan documents (IRA, 401(k))
• Property deeds and car titles (until sold or transferred)
• Military service records

Scan these documents and keep them backed up securely — but always retain the original copies too.

Tips for organizing and storing financial records

• Use folders by category and year: Digital or physical, this helps when it’s time to file taxes or apply for a loan.
• Set reminders to purge old files each January.
• Shred sensitive documents to avoid identity theft.
• Use cloud storage with encryption (like Google Drive, Dropbox, or OneDrive) for easy access and backups.

Less clutter, more control

Knowing how long to keep financial records isn’t just about saving space — it’s about protecting yourself, staying organized, and being prepared for anything life (or the IRS) throws your way.

With a simple system in place, you can reduce clutter and gain peace of mind — all while staying financially sharp.