These financial documents are worth keeping

In this season of paper piles, bursting files and inscrutable tax forms arriving in the mail, tip your cap to one aspect of the new tax bill. If you’re among the millions of people who will no longer be itemizing deductions next year, there may just be less mess in your future.

This is no solace for people who hate the bill’s politics or the way it hits their personal finances. Still, there is potential for decluttering, which leaves us with a pressing question: Just what records should we be keeping and for how long, and what can we safely shred or delete?

Turns out that you still need to keep more than you might think. While some people won’t need to keep track of every last charitable deduction any longer, your financial life is made up of more than just the things that the IRS is willing to let you deduct.

Here are some factors to consider:

IRS instructions: Some of what you keep lives in storage only to satisfy an auditor who may one day ask for it. The IRS expects you to keep your tax returns and any supporting documentation for three years after you file.

There is more, though. If you somehow neglect to report income that you should have, and it’s more than 25 percent of the gross income you did report, then you should keep your records for six years from the due date. If you don’t bother filing at all in certain periods, the IRS expects you to keep records for those

years forever. Deductible expenses: So you have some receipts. Hundreds, perhaps, from charitable contributions and meals purchased for customers in pursuit of side hustles or full-time small businesses. The IRS says that if you scan things on paper and save them digitally, the auditors won’t demand originals years later. Credit-card statements will suffice too. There are a few quirks with keeping records on charitable contributions; consult IRS Publication 526 for more on those.

Can your bank bail you out with transaction data years later? Ask before you assume anything. JPMorgan Chase, for instance, keeps records of checks, credit and debit card transactions going back seven years. If you’ve left it for another bank, it will still look up the information (since you won’t have online access anymore), but there may be a fee. Investments: You need to keep track of what you paid for a stock or a mutual fund in order to

calculate capital gains or losses later.

Generally, your brokerage will do this for you, especially since new record-keeping rules went into effect for most transactions starting in 2011. Even if you switch firms, the cost basis for your investments is supposed to be transferred electronically to your new firm. Check carefully within a month or two of switching to make sure this actually happened.

It also can’t hurt to keep these records yourself as a backup. For instance, you could just dump every electronic trading notification into an email file, or scan a paper statement or a year-end summary of all transactions and store it in a cloud account, or perhaps two of them just to be safe.

Fidelity warns that it may not be able to serve as your backstop when it comes to nondeductible individual retirement accounts. That’s because it doesn’t have access to the relevant IRS form, 8606, that taxpayers fill out. So you’ll want to hang on to that one until

you’ve withdrawn all your nondeductible contributions to the account.

Another crucial bit of IRA record-keeping is any record of conversions from regular IRAs to Roth IRAs, which allow you to withdraw the money free of taxes decades later.

Everything else: Follow the IRS rules up above for receipts related to a health savings account. UnitedHealthcare keeps relevant data from its explanation of benefits forms for 10 years from the claim date, and will give you copies for free even if you or your employer are no longer customers.

If you or a parent expect to qualify for Medicaid coverage for long-term care, your state will probably want to examine all of your transactions (not just health-related ones) for several years prior to the year you apply.

Keep copies of all major insurance policies, and a home inventory of things you’ll want to replace if they are damaged or stolen. And hang onto the agreements for all major loans, from student to mortgage, and any letters confirming payoff. Keep child support, alimony and other payment records forever, too, along with the divorce documentation, especially if things are acrimonious.

Home improvement receipts are essential if you think the value of your home will rise hundreds of thousands of dollars over time. Birth certificates and Social Security cards still seem to come in handy, and you may need military discharge papers once in a while, too.

Estate planning documents can also be a source of contention, so hold onto the originals of any will, trust and related documents, plus beneficiary designations from insurance policies or investment accounts. If you’ve received an inheritance or gift, you’ll need to document the event and the value as well, perhaps through a formal appraisal.