How Long To Keep Documents (And Why)?

Exact Answer: 3 To 7 Years

In this electronic world, every matter is either available in online or offline mode. This also includes the financial statements, bills, tickets, tax returns, and many essential documents. They had to be preserved according to their importance.

Protecting the necessary documents might seem harder to many people. Each day there happens a case of bankruptcy, theft, cybercrime, and other fraudulent activities.

Some people believe that the papers must be destroyed beforehand so that they won’t be accessed by anyone both online and offline.

The essential documents must be destroyed after preserving them for a certain period or after they become useless.

How Long To Keep Documents?

TypesPeriod
Documents storageThree to seven years
Bank records and tax refund documentsMore than a decade

When financial life goes on getting complicated, it becomes difficult for an individual to know how long to store documents and when to get rid of them. The tax returns are the most important part of one’s financial history to be kept stored.

By definition, a document is a record or file of an event or thing required in each path of life that has to be stored safely according to their requirement. These include invoices, wills, executive orders, product specifications, and many others.

One must keep a hard or electronic copy of the tax return and any payments done to the government for the whole life. It is better to keep a record of the major financial events such as the legal filings or documents to remain safe.

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People can easily have access to their paperless documents online and store them safely. After filing a return, the IRS may ask for supporting documentation for a few years according to the filing conditions. One of the good ideas is to store the documents related to tax returns such as bank and brokerage files, tuition expenses, and charitable donation bills for three to seven years.

The regular bank and credit statements must be stored online if someone wants to be paperless. Also, the pay stubs must be kept safe when tax season arrives to fulfill the accuracy of the demanded form.

It is not required to keep the home bills and cell phone bills for a long period for tax purposes. They must be disposed of after the payments have been verified.

Why Keep Documents For That Long?

It is very important to keep documents safe in digital format or paper mode. In this digital era, the electronic method can be helpful as well as harmful at the same time. There may be theft, cybercrimes, frauds by which one can lose every important file.

To store the document digitally, one must keep it safe with a complex password. The password given must be different from the ones used in other social media accounts.

One should not just throw away the private documents in a large pile as they can be caught by a theft. They must be invested in a cross-cut shredder to destroy the traces of the personal papers.

Storing documents in digital mode can be useful as it controls the growth of files and minimizes the storage space. Record management can help in keeping the documents confidential and secure them.

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The physical documents may consume more expenditure and cost more time to find the required document. In digital mode, the operating costs are reduced and the efficiency of the employees is also improved.

The documents can also be removed in case the system fails or a virus enters into it. They may be lost if they forgot their usernames and passwords to access it. There may be a risk of cybercrimes and duplicate data entries in the system.

Conclusion

When businesses grow and become wider, the records also keep increasing and it becomes difficult for the company to store them physically. The papers also get damaged after a few months due to fire or flood situations.

Therefore, they must be stored digitally with complex passwords to remain out of danger.

The financial statements, important bills, and tax returns must be kept permanently to present them before the government in times of need. In smartphones, either the document is kept in Google Drive or Microsoft Onedrive. Therefore, the system must contain antivirus software to prevent viruses.

It’s important to maintain records properly so that no one could be able to make ill use of them.

References

  1. https://mountainscholar.org/bitstream/handle/10217/185125/AEXT_091652013.pdf?sequence=1
  2. https://www.jstor.org/stable/24980135
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