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When I met my husband, he kept all his gas receipts and recorded the mileage, date, and cost of his gas purchases in a notebook. After years of biting my tongue, I eventually blurted out “what are we planning to do with this information?!” When he couldn’t come up with an answer (we didn’t lease or expense our mileage), he finally agreed to toss the receipts after reconciling our bank account.
If you find yourself knee-deep in receipts this tax season, take advantage of the opportunity to blurt out “what are we planning to do with this information?!” You might find it is time to clear the clutter. But before you bulldoze that pile, you should know that some things are worth hanging on to.
What to keep and what to toss:
Grocery receipts and other nondeductible expense receipts and statements can be destroyed after they have been recorded for budgeting purposes.
Paycheck stubs should be checked against your W-2. If it’s a match, you can toss them. If not, request a revised W-2, called a W-2c.
Canceled checks should be saved for three years.
Utility bill stubs may be destroyed after recording, however, you may wish to hold onto these for a year to compare monthly costs.
Documents pertaining to buying, selling or improving your home should be kept as long as you own the home.
Receipts from major purchases should be kept as long as you have the item.
Credit card receipts can be destroyed once you have reconciled with your monthly statement. Additionally, credit card monthly statements can be destroyed on an annual basis.
According to the Internal Revenue Service (IRS) you should keep your individual tax return documents for seven years. The IRS has three years from your filing date to audit your return if it suspects good faith errors. However, the IRS has six years to challenge your return if it thinks you underreported your gross income by 25 percent or more.
(Before taking out the trash, be sure that all identifying information has been destroyed to avoid any threat of fraud.)
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