Record retention is an important financial topic. Bank statements, credit card bills, canceled checks and other documents can be useful for tax purposes, as proof of a transaction or payment, or for other reasons. But how long should you keep them?

While there’s no absolute rule about what you should keep, it’s good to remember that US federal tax rules require you to have receipts and other records that support items on a return for as long as the IRS can assess additional tax. And since the IRS has about six years to assess additional tax if you underreported your income by more than 25 percent, many tax advisors recommend holding all tax records for about seven years, building in extra time for any unforeseen delays in processing your return. However, remember the tax period is unlimited if the IRS suspects fraud.

Additional suggestions that may be reasonable for many people

  • Credit card and bank account statements: Save those with no tax significance for about a year, but those with tax significance should be saved for seven years.
  • Canceled checks: Those unrelated to anything you claimed on your income tax form and not needed to show you’ve paid a bill or debt probably can be destroyed after you’ve verified that your bank statement is correct. However, canceled checks that support your tax returns, such as charitable contributions or tax payments, probably should be held for seven years.
  • And, you may want to keep indefinitely canceled checks and related receipts or documents for a home purchase or sale, renovations or other improvements to a property you own – at least until you no longer own the property.
  • Deposit, ATM, credit card and debit card receipts: Save them until the transaction appears on your statement and you’ve verified that the information is accurate. You may wish to make an exception for expensive item receipts. If the item is under warranty or you have to file an insurance claim, the receipt may be helpful.
  • Finally, before tossing away any document that contains a Social Security number, bank account number or other personal information (especially financial information), shred it to avoid becoming a victim of identity theft.

Want to know more? Read the entire FDIC Consumer News article for suggestions on record retention.