Every year, the average household accumulates hundreds—if not thousands—of pieces of documentation tied to their financial life. Receipts, statements, tax forms, property records, donation acknowledgments, and insurance paperwork can quickly pile up. With limited time and storage, many people are left wondering: What do I really need to keep?
Whether you're preparing for tax season, selling a property, making a charitable donation, or filing an insurance claim, having the right documentation can mean the difference between a smooth process and a stressful scramble. Yet, few people are confident about how long they should retain these documents—or even what counts as "adequate" in the eyes of the IRS or an insurance adjuster.
We will cover the key types of financial documentation you should keep and why it matters. We'll focus on two major categories: tax-related documentation and insurance-related documentation, with guidance tailored to common questions.
Before we dive in, it's worth noting that digital records are not only acceptable—they're often preferred. Scans, PDFs, or clear photos of receipts and records are usually valid for both tax and insurance purposes. Just make sure you back them up, ideally with at least one off-site or cloud-based copy.
Tax-related documentation
Tax documentation plays a critical role in your financial life—but the IRS's specific rules on what to keep (and for how long) aren't always clear-cut. In this section, we'll walk through general retention timelines and specific types of tax records to help you stay organized and prepared.
What to keep and how long
Receipts should be kept forever according to Section 6001 of the Internal Revenue Code, which requires taxpayers to maintain books and records. However, for most individuals, 6–7 years is usually sufficient unless there are extenuating circumstances.
The statute of limitations gives further guidance:
- Keep records for 3 years after filing your return.
- Hold on to records for 6 years if you underreported income by more than 25%.
- If a return was never filed, or if the IRS suspects fraud, there is no statute of limitations for assessing taxes.
Beyond that, consider these specifics:
- Bank and credit card statements: Retain year-end summaries or download electronic versions annually, since most banks only store 7 years of data.
- Brokerage statements: Also keep for at least 7 years.
- Retirement account statements: Generally, not required unless there's a taxable event like an early withdrawal or conversion.
- Charitable donation letters and receipts: As noted, keep for at least 6 years after the year you claim the deduction.
- Purchase agreements and ownership records: For anything with a cost basis, keep until six years after you sell the asset.
While some suggest discarding deal-related correspondence or draft contracts, we recommend caution. These communications can sometimes be used to establish facts or valuations in complex cases, especially for real estate or business transactions.
Business expenses: Not all receipts are equal in the eyes of the IRS
Business expenses are often misunderstood when it comes to meeting IRS documentation requirements. Many assume that a credit card or bank statement showing a purchase is enough. But if you're audited by the IRS, you'll likely need more. For example, a charge from Home Depot doesn't explain what was purchased or how it ties to your business activity.
For specific categories such as travel, entertainment, gifts, listed property, and mileage, the IRS requires what's known as strict substantiation. This means keeping both the receipt and contemporaneous notes explaining the business purpose.
For all other business expenses, the standard is general substantiation. The IRS accepts credible evidence, which may include bank or credit card statements, cancelled checks, or wire transfers, along with an actual invoice or receipt. If a receipt is missing but the purchase was clearly business-related and obvious (e.g., a recurring software subscription), the IRS may allow it—but this is at their discretion. When in doubt, document.
Property-related tax records: The cost basis connection
One of the most important reasons to maintain financial documentation is to substantiate your cost basis—the amount you paid for an asset, plus certain related costs like improvements. This figure plays a crucial role in determining your gain or loss when you sell.
If you own property—business or residential—you should retain all purchase records and any documentation related to improvements. This includes items like roofs, flooring, or built-in fixtures.
How long should you keep these records? A good rule of thumb is to maintain them until six years after you sell the asset. For added peace of mind, you might choose to retain them indefinitely.
Charitable tax deductions: Show your work
If you plan to deduct charitable donations on your tax return, you'll need supporting documentation—especially for non -cash contributions. For household goods or property donations, keep the receipt, proof of purchase and records of any improvements that increased the value of the donated items.
For donations of $250 or more, the IRS also requires a contemporaneous written acknowledgment from the charitable organization. This acknowledgment must include the amount or a description of the donation, whether any goods or services were provided in return, and an estimate of their value if applicable.
Donating business inventory is more nuanced. You'll need to
retain proof of purchase and documentation that shows how the cost
basis was calculated, usually based on your method of inventory
accounting.
So how long should you keep this paperwork? The general
recommendation is six years after your last deduction, especially
for contributions with carryforward deductions. If the contribution
was limited and stretched across multiple tax years, maintain the
related records for the entire period.
Insurance documentation: Prepare for the unexpected
Insurance claims often require quick access to detailed documentation, particularly in the event of a disaster. Make sure you always have a copy of your insurance policy. While many providers now maintain this online, you'll want your own version in case of claim disputes or provider error.
You should also record your major possessions—especially high-value items like cars, boats, planes, or art. Take photos or videos of the contents of your home and keep receipts for major purchases. These records help ensure fair compensation if you need to file a claim under a replacement cost policy.
Not all insurance is created equal. Tier 1 providers often offer replacement cost coverage, which reimburses you for the full cost of replacing a lost or damaged item with a similar new one. Other policies may use actual cash value (ACV), which subtracts depreciation and often results in a much lower payout.
In either case, documentation is your best protection. If the item isn't covered under a collectibles or scheduled policy, you'll need to show proof of value to receive maximum compensation.
Let the professionals help, but keep your own records too
Your accounting and tax professionals can help organize and retain important financial records electronically. But don't rely entirely on others. Having your own digital backup can help you stay prepared when it matters most.
In today's world, documentation isn't just about paperwork—it's about protecting your financial future. Take the time to organize your records now, and you'll thank yourself later.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
