You're diligent about balancing the checkbook each month, and your spouse is begging you to toss old statements that are taking up precious storage space. Throwing away financial records can be a scary thing, but keeping them for years can be a storage--and spousal--nightmare. In general, plan to keep your bank statements for at least one year but no more than seven.
Simple Tax Returns
If you prepare a simple tax return each year without itemizing, you only need to keep bank statements for a year. The same goes for cancelled checks, or copies of cancelled checks your bank sends in your statement. Calculate the year on the tax filing due date, or any date after it was due that you filed the return.
Complex Tax Returns
The IRS points to its “period of limitations” as a guide for how long to keep records to support tax returns. Keep them three to seven years to amend a return, or in case the IRS audits you or assesses an additional tax. Gregory Copp, a certified public accountant in Austin, Texas, suggests you keep indefinitely any tax supporting documents such as bank statements. You should also keep bank statements indefinitely if you knowingly file a false return or don’t file at all.
Buying or selling a house is one of the largest transactions you'll make. Keep all bank statements relating to those transactions and for the entire time you own the house. The statements will also support related transactions for things like property taxes or home improvements. You can toss the bank statements seven years after you sell a house.
Discarding Bank Statements
Once you feel you can discard those bank statements, do so wisely. Shred or burn them so no personal information falls into the wrong hands. You can avoid a paper trail at all if your bank can give you a record of electronic files. You can store those on a personal computer or portable drive.
- Federal Deposit Insurance Corporation: Consumer News
- IRS: Publication 552 – Main Content
- Personal Interview, Gregory A. Copp, Inc., Certified Public Accountants, Austin, Texas. 512.477.2000. email@example.com
Based in Central Texas, Karen S. Johnson is a marketing professional with more than 30 years' experience and specializes in business and equestrian topics. Her articles have appeared in several trade and business publications such as the Houston Chronicle. Johnson also co-authored a series of communications publications for the U.S. Agency for International Development. She holds a Bachelor of Science in speech from UT-Austin.