Should we save paper copies of outdated financial statements or keep electronically?

[sdtech]

Same with us - quicken since 1992 with scanned/photo medical, tax and warranty purchases.

Have backup to the cloud. Keep paper tax records 10 years. We find it easy to just snap a picture of anything paper and airdrop it the computer instead of scanning.

 

[grasshopper]

PSA, it is recommended to wear a dust mask when shredding lots of paper.

 

[RunningBum]

An alternative to shredding or burning is to soak them in water with bleach overnight, stirring on occasion. Separate the pages as much as possible, otherwise pages stuck together may still be readable, but after dumping the water you should have a big glob of pulp that you can throw away. I toss mine in with my kitchen garbage or cat litter to make it even less likely for someone to find them.

Use a bucket or can for this, not a sink or bathtub as the ink may leave a stain.

For large documents like insurance policies usually only a couple pages have my info on it so I pull those out and recycle the rest. It's just easier to deal with less paper.

It's all likely overkill as it's far more likely for my info to be obtained from hacking any number of places it resides in than from sorting through my garbage for paper documents but it seems like a good idea.

 

[FlaMariner]

Why the 7 years of archiving tax documents?

This is from the IRS and 3 years seems to be the fit for us...

How long should I keep records? | Internal Revenue Service

Get tips on record retention -- Learn the period of limitation on income tax returns, connecting records with property and keeping records for nontax purposes.

www.irs.gov

And this is an article form Nerd Wallet:

https://www.nerdwallet.com/article/taxes/how-long-to-keep-tax-records

 

[ncbill]

We keep only 3 years for supporting documentation...W2, 1099, K-1 income.

No cash-based businesses or ay other opportunity to understate income for us.

So no need to keep 7 years.

 

[Ronstar]

So no need to keep 7 years.

Unless you recently sold a piece of property you owned for more than 7 years and need documentation to support your basis.

I’m keeping everything. Digital - everything.

 

[NoEZmoney]

We keep last 7 years of hard copies on everything and do a shred / weed-out 2X a year. We have however kept all our 1040's ever since we started working as adults just for nostalgia if nothing else and in the case something ever happens to doubt our income existence in gov records. 7 years backlog is what I've always been advised to keep.

DW grandfather passed and we had to go through his stuff, he kept EVERYTHING, old posted checks, bank docs, receipts, you name it, he had two huge file cabinets full and several document boxes containg every paid receipt for utilities, bank loans, donations, it was overwhelming. One relative demanded that we go through everything piece-by-piece which was tedious and testing. We got to where we reached our tolerance level and turned it over to the one relative as we had gotten the most important docs to the necessary parties for estate settlement. To this day, there is one file cabinet still full of needless stuff which I think is a failure of closure on one person's part. I think she expects a hidden treasure map to fall out of a folder I suppose.

 

[imjustawarrior]

I still have paper returns and paper supporting documents. I have recently started scanning all new stuff. I save a pdf of EOY statements. I scan all medical receipts to redeem against our HSA someday.

If I happen to lose all my electronic copies and get audited, oh well. I think the risk is on par with my house burning down and losing all paper copies.

Maybe one day I'll go through our fireproof filing cabinet and see what I can scan and dispose of.

I'm not going to lose sleep over very low risk possibilities. That would just steal my joy.

 

[TheWizard]

Just put outdated financial statements in your recycle bin along with other junk paper.
Nobody really gives a sheet about your financial situation so just ignore that completely...

 

[ncbill]

Unless you recently sold a piece of property you owned for more than 7 years and need documentation to support your basis.

If it's real estate you bought then purchase price & sales price are recorded.

If you inherited it you would want an appraisal to establish the stepped-up basis.

But the odds that you would ever be asked about the above at all are very low.

 

[Jerry1]

The only thing I worry about keeping is the supporting documents for my tax return. Something like a personal financial statement is basically irrelevant going forward. I'm not saying I get rid of everything but ultimately, I probably wouldn't be able to find them anyway and at some point they're most likely heading for the bin we take to the local shred day. Digitally, I keep a PDF of all my year end statements (statements that show a financial balance at year end). I think they're practically useless but I keep them just in case something happens and my financial institution somehow loses my data. I want to at least be able to go back to the previous year end.

 

[Ronstar]

If it's real estate you bought then purchase price & sales price are recorded.

If you inherited it you would want an appraisal to establish the stepped-up basis.

But the odds that you would ever be asked about the above at all are very low.

In our case, it wasn’t that simple. We had an LLC that bought an office building. 8 years later we sold/ 1031’d it and bought 3 condos. 6 years later sold the condos individually over the next 3 years.

One of our partners was astute enough to notice that our big 6 accounting firm wasn’t preparing our tax return of one the final years of the LLC correctly. When we questioned them, they said that to more accurately prepare the return, they would need documents from our original closing, which the didn’t have because they were only required to keep 7 years of records. Luckily we kept everything, gave them the info, and they fixed the problem.

 

[Katsmeow]

I scan in all receipts and most financial documents. Unless it is something I need to keep the original of (very few things) I discard originals. Most financial statements I don't keep at all if I can download them. Occasionally I might keep one but I have little need for most of them.

 

[triangle]

I am inconsistent about which documents I keep paper copies of versus not. I hang on to tax returns for decades and non-retirement account information for nearly forever. Since before 2010 (I forget the exact date enacted) brokers don't have to keep track of cost basis and report it on the1099-B. It can be difficult to find and/or calculate the correct cost basis for older securities, so that part of the law passed in the wake of the 2008 financial crisis law was very helpful.

I wish I could get the usual electronic statements each month, but at the end of the year a big paper statement of it all combined. A printout of the whole year's activity on their letterhead, to avoid the monthly printing and postage, but still get something physical for my records.

 

[audreyh1]

Fortunately my brokerages have done a very good job of tracking cost basis even before 2011 and I check on it occasionally.

Yeah I keep closing statements of any purchase and sale.

 

[Tracer]

I don't keep statements. Who needs all that paper? They are just a snapshot in time which I don't find useful. I don't even get statements. Except for tax statements once a year which I like hard copies and my monthly CC statement which I discard after looking it over, they are all paperless. I do practically everything through Fidelity including my checking account and 95% of my credit card purchases. If I need to go back and research something on an old statement, they have digital copies of everything which I can easily get to on their website. I do like to download my annual Fidelity Visa Summaries which I keep in a file on my computer where all my purchases are broken down by category. That has been useful in the past if I have to go back and research something.

As far as tax returns, I do my own with Turbo Tax. They have all of my previous returns which I can download anytime. I do keep paper copies of backing documents like 1099's, etc. for about the last 7 years.