During these times of cleaning out files and closets, it's a good time to figure out what paperwork is ok to keep, and what needs to be shred and when to shred.
Here is a guide from the Federal Trade Commission (FTC) for getting rid of some of that extra paper clutter and free up some shelf and cabinet space:
- Immediately shred – All sales and ATM cash withdrawal receipts, utility bills, credit card statements that have been paid, expired warranties, cancelled checks that won’t be used for tax purposes, and unsolicited offers for credit cards. Also remove and shred the labels off of your prescription medications before throwing away the empty bottles.
- Shred within one year – Destroy your pay stubs after double checking them with our W-2 or other tax forms, medical bills that are undisputed and paid, and bank statements.
- Shred after seven years – Shred tax-related receipts, 1099 and W-2 forms, canceled checks, and other records used for tax deductions. Although the FTC says that we should hang on to tax returns indefinitely, the Internal Revenue Service states that you can safely discard old returns three years after filing date an original tax return or two years after you have paid the tax due, whichever date is later.
In addition, when you no longer need an expired driver’s license or passport, a birth certificate, or old insurance policies, they should be shredded.
Keep any automobile titles until the vehicle is sold and hang on to home improvement receipts and home deeds for the entire time you own a property. Don’t shred disputed medical bills until they are resolved.
Here's a list of what should never be shredded and should ideally be stored in a safe deposit box at the bank or in a locked box:
- Divorce decrees
- Original marriage and birth certificates
- Adoption and citizenship papers
- Social security cards
- Active passports
- Death certificates of family members
- Military records
- College diplomas
- Power of attorney documents
- Wills and trusts
- Active life insurance policies
If in doubt of what you should shred and when, reach out to the Internal Revenue Service, your tax accountant, banker, or financial adviser who will likely be able to advise you about your particular situation.