It is critical for your business or organization to be aware of its record retention requirements. How long are you supposed to keep a certain document? For certain businesses, the answer can vary state-by-state or by industry, and it can also depend on the type of document. Records need to be kept on file for different reasons, such as for audits or for retrieving vital information. Once you understand the requirements for keeping records, implementing and following a records retention policy is a great organizational practice. It is also great practice to retain important personal documents for specific periods of time. At the end of any records retention period, it is important to have a secure method to dispose of the documents to prevent the loss or theft of sensitive information. This is why having a professional shredding service provider is a key component for any records retention policy.
It is recommended to keep bank statements for up to one year, unless you need them for tax-reporting purposes. In that case, it is recommended to keep these records for up to three years. Your bank statements may contain sensitive information such as your name, address, bank account numbers, balances, and financial transaction history. You should securely shred these documents once you no longer need them.
It is recommended to keep your wage income documents such as W2s or 1099 documents for up to six years. This is because the IRS can look at past years and has up to six years to contact and audit you if you have failed to correctly report your income. Your wage income documents may contain sensitive information which can lead to identity theft if they end up in the wrong hands, so it is important to shred these documents when you dispose of them. The sensitive information on these documents includes your social security number and your employer information.
Pay stubs should be kept to compare to your wage income statements in order to make sure you are getting paid correctly. These records should also be kept to provide proof of income when needed (when applying for a mortgage, for instance). It is recommended to keep your pay stubs for one year.
It is recommended to keep records of your medical bills for three years. This is because your insurance company may request proof of your doctor’s appointment or of your medical expenses in order to verify a claim. In addition, if you are reporting a deduction on your taxes due to a medical expense, you may need to keep the record for three years for tax record purposes. Medical bills may contain personal identifying information (PII) and your personal health-related history protected by HIPAA, so like all of these other documents, it is important to securely shred once they are no longer needed.
It is recommended to keep your utility bills for one year, so you have a record of what the utility company is charging you in case of a dispute. Utility bills are also useful when you need to provide proof of residence. In addition, if you are reporting your utility expenses as a tax deduction, like in a home office, then you need to keep these documents for three years after filing the tax return.
Credit Card Bills
It is recommended to keep your credit card statements for one year, in order to have a record of your expenses or in case of a dispute on your credit card chargers. However, if your credit card statements are needed for tax-reporting purposes, it is recommended to keep these documents for three years.
Social Security Statements
It is recommended to keep your social security statements for two years after the current year, in order to have them available for the Social Security Administration upon request.
It is recommended to keep your income tax documents for at least three years, however in certain situations it may be recommended to keep your tax documents for longer. You should keep employment tax records for at least 4 years. You should keep your tax documents for six years if you have not reported your income correctly. You should keep your tax records for seven years if you file a claim for a loss from worthless securities or bad debt deduction. You should keep your records indefinitely if you do not file a return or if you file a fraudulent return.