Ask the cubicle expat: How long should I save financial records?

July 5th, 2007

A freelance pal called me mid cleaning frenzy yesterday, wanting to know how long she needed to save old pay stubs (back from her bad old 9-to-5 days), bank statements, utility bills, you name it.

I told her I’d always “heard” you should save everything seven years but that she should call her accountant to be sure, as that was a very unscientific, uncredentialed answer. Not satisfied, my freelance friend pressed on: “OK, but what do you do with all your old-and-moldy receipts and financial records?”

I told her I have everything saved in my office or garage for at least seven years and that she should still ask an accountant if she wanted solid advice. But seeing as it was a national holiday and she was hell-bent on spending the day shredding papers she no longer needed, I googled this ultra-helpful Bankrate table on how long to save what. Note that the table is not geared towards self-employed folks, so you may want to check with an accountant to make sure you’re hanging on to everything you need.

Some items I’ve hung on to that I’d be sunk without:

• All my previous income tax returns. If you’re making a big purchase — say, a home — and you don’t have a steady employer, the bank will likely want to see several years of these.
• At least seven years of rental agreements, utility bills, credit card annual statements, expense receipts, and anything else that can be deducted as a business write-off.
• Annual retirement fund and social security statements. (Duh.)

Again, don’t take my word for it. Talk to your tax professional, financial planner, or business manager. Meanwhile, that Bankrate chart is a great place to start.

Entry Filed under: Ask the Cubicle Expat