Personal Finance and Investing

How Long to Keep Tax Records
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
January 3, 2008
https://www.kiplinger.com/article/taxes/T056-C001-S001-how-long-to-keep-tax-records.html

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Keep receipts for major home improvements until you sell the house. You may want to show potential buyers how much you've spent, and you can use certain home-improvement expenses to lower any tax bill you might have on your home-sale profits. (You generally won't be taxed when you sell your house, unless you have lived in it for less than two years, if you rented out part of it, or if you sold it for more than $250,000 in profit if single or $500,000 if married). For more information, see Taxes and Home-Sale Profits and Finding Your Home's Tax Basis.

It's also a good time of year to get rid of some other records. You generally can toss your monthly investment statements when your year-end statements arrive, as long as everything matches up with the year-end report. ((And assuming the year-end reports show the costs of all purchases made during the year, which mine don't -- Vanguard, Fidelity, Schwab. So you have the cost basis information when you sell them. And don't forget -- those automatic distribution reinvestments are part of your cost basis-- Progree))

You should, however, keep records showing what you originally paid for mutual funds and stocks until you sell them You'll need the information when you report the gain or loss on your taxes.

Also hold on to year-end statements showing how much you received in dividends or capital-gains distributions, so you won't end up paying taxes on them twice if you reinvest that money. ((and make sure the year-end statement shows that, mine don't, GRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR. You need a statement/statements showing what you paid for every freaking share you own, regardless of how it was acquired. So I have to keep the monthly statements. -Progree))

And keep any Form 8606 tax records reporting nondeductible traditional IRA contributions, so you won't end up overpaying your tax bill when you start to take out the money in retirement. See Keep Only Key Retirement Account Forms for more information. ((Yup -- my tax preparer asked for them all, going back to when I made my first non-deductible contribution almost 2 decades before -- Progree))