When you pay your taxes, you’re supposed to keep track of them for seven years. That’s because the Internal Revenue Service generally has seven years to audit your taxes if it thinks you made a mistake. Most people understand that they must keep important financial records, but there are other bills and receipts that are less obvious. You know you need to keep your refrigerator’s warranty until it expires, but what about your electric bill? Should you keep your internet bill too?
If you don’t receive a paperless statement, you may still be one of those people who has to keep track of all their receipts, financial documents, and bills in a shoebox. Hopefully you have some sort of organization system in place so that you don’t have years of different bills thrown together. If shoe boxes are a mess, try looking at the age of the documents as you organize them. Depending on their age, you may be able to tear them up and throw them away instead of keeping them.
How long do I have to keep utility bills?
As a general rule, you should keep any bills you haven’t paid yet. You should ideally pay the bill before it is due. If for some reason you’re paying your bill late, you should definitely keep the paper bill on hold to make sure you don’t forget the bill when an accident happens.
home improvement records: Many people forget that they must store their home improvement records for at least three years from the date their tax return is due. This is the return you make that shows the income or loss you made on the house when you sold it. These improvement costs help you show how much money you made or lost when you owned the home. If you plan to sell the home and make improvements, keep your records for the next seven years because they may be able to help you lower your taxable gains when you finally sell the property.
Birth certificates and marriage certificates: It is important to keep all documents like these forever. Be sure to keep birth certificates, adoption papers, records of paid mortgages, death certificates, marriage license, and wills in a safe place.
Real estate and investment records: Generally, you’ll need to keep your real estate and investment records on hand for three years. This is based on the Internal Revenue Service’s rules about auditing. If they audit you, you will need to use these documents to show your capital gains tax based on your cost basis and the taxes you owe when you sell these investments.
Paid Loan Records: If you’ve paid off your loans (congratulations!), make sure you keep a record of them for seven years. After that period of time is up, you can get rid of the history.
receipts While you can get rid of most of your receipts, there are some that you should keep. If you plan to itemize your tax return, you’ll need to keep the receipts from whatever you plan to itemize. Be sure to keep all of these receipts for the next three years of tax returns.
Medical bills: Medical expenses are another cost that can reduce your tax burden. You need to keep a record of these invoices to support any deductions you claim on your tax returns. In addition, your insurance company may require that you send them proof that you have seen your doctor or actually received a certain procedure. You should keep your medical bills for a year just to be sure your insurance company won’t need them. If your expenses are more than 10 percent of your adjusted gross income and your allowable Medicare expenses are not reimbursed, you may be able to deduct them. In this case, be sure to keep medical records for three tax years.
tax revenue: The Internal Revenue Service generally recommends that people keep their returns for three years from the date the original return was filed or two years from the date the tax was paid — make your decision based on which date is later. If you are claiming a loss due to bad debt deductions or securities losses, you need to keep your tax records for seven years.
Water and electricity bills: Utility bills still need to be saved for a while, but you don’t have to save them as long as you do with other items. In most cases, you only have to keep your utility bills for one year. If you plan to claim your home office as a tax deduction, you’ll need to keep your utility bills for three years.