How long should you keep your records?

Tax returns (state and federal):

I am not sure about the U.S. as I’ve heard the IRS says you should keep everything you’ve ever filed, FOREVER.. but in Canada, I’ve heard from the CRA (Canada Revenue Agency) that we should keep up to 7 years of returns.

That includes receipts for charitable contributions, mortgage interest and business expenses, and what may be smart is to grab your business credit card statement and use that to back up tax filings.

Some records, I am sure, require that you keep them for longer than 7 years. It’s best to check with the IRS and CRA.

Pay stubs:

I keep all of mine until I receive my T4, which I suppose is what you call a W2 in the States.

I keep my pay stubs so that I can see if it matches what I was supposed to have earned. I’ve never seen a mistake made yet, but better safe than sorry.

Receipts:

I only keep receipts that are business expenses or until their warranties expire.

Another reason to keep receipts would be if they were big ticket or big items.

You can actually use those in lieu of taking pictures and making a full notation of what you have in your home so you can claim it under home insurance if anything happens to your stuff.

Social security statements: Again, only the most recent ones.

Credit card statements: One year

Bank statements: One year

Canceled checks: One year

RRSP and 401(K) statements: I only keep the most recent ones, but I do have a tendency to scan in everything just in case, before I shred it. I just do. It’s compulsive.

Brokerage statements: I keep all of my retirement, brokerage and investment statements (scanned of course), until I sell them.

House records:

I don’t have a home, but I’ve heard that you should keep all records of home improvements, renovations, as well as the papers for when you buy or sell a home.

I’ve also kept rental agreements just to back up my tax statements and to remind me of all the addresses I’ve ever lived at in the past 5 years (something the government sometimes needs for security secret clearance).

The fun bit, is that if you keep all of those receipts that pertain to your home, you can add it to your original purchase price of your house and when you sell it you can save money by reducing your capital gains tax on any profit.

Insurance policies:

I keep all of my insurance papers. I scan most of them in, and keep the most recent ones, while shredding the old ones if they are renewable policies.

But for permanent life insurance policies for example, I keep them forever. But scanned, as a backup copy in case of a flood or fire.