What and When to Shred
Certain documents should be shredded now, such as credit card applications or expired documents, including credit cards, passports, visas, and identification cards.
Tax returns and the supporting documentation i.e. cancelled checks/ receipts; charitable contributions, mortgage interest, retirement plan contributions, and records of tax deductions taken, should be kept at least 7 years. The IRS has 3 years from your filing date to audit your return for good faith errors and 6 years to challenge a return for under-reported income.
For seniors, retaining these records will be critical if a loved one ever needs long term nursing care. Medicaid can require five years of canceled checks, bank and brokerage statements, and other financial documents.
If you have made nondeductible IRA contributions, those records should be kept for as long as necessary to establish that you have already paid tax on the money when it comes time to withdraw.
Brokerage statements and other documentation such as purchase or sales slips from your brokerage or mutual fund should be retained until the security is sold so you can establish capital gain or loss.