I've been working on my taxes and going through all of my files of receipts. Can I ever get rid of them? By Kimberly Lankford, Contributing Editor March 2, 2006 I've been working on my taxes and going through all of my files of receipts. Can I ever get rid of them? I'm running out of room to keep all of my boxes of financial records. It seems like I probably wouldn't need to keep them all forever, especially ones that I don't end up using for tax write-offs.Good news: Even though you'll need to keep some records for a long time, many pieces of paper become redundant within months of receipt and can be thrown away pretty quickly. You'll want to keep tax returns forever. You'll need them when you apply for a loan or apply for disability insurance. Plus, old tax forms can be useful if you can't track down some of your other paperwork -- like showing taxes you've already paid for dividends and capital gains distributions you reinvested. You might be able to find some of the information in those old tax returns. But you usually can throw away supporting documents -- those files you hold onto just in case you're audited -- three years after filing that tax return, or six years if you have your own business. You generally can't be audited after that. You can get rid of many records a lot earlier. Toss ATM receipts as soon as the withdrawals or deposits show up accurately on your bank statement. Throw away most credit card receipts when they appear on your monthly statement, unless you need to keep them for tax purposes (especially if you're self-employed). You can throw away utility receipts as soon as next month's statement shows you paid the bill. However, you'll need to keep those receipts for taxes if you're claiming a home-office deduction or want to show future homebuyers the average heating costs. For more information about the tax rules for self-employed people, see Freelancers, Meet Schedule C. You also can get rid of a lot of the paperwork for your investments. You generally can toss monthly investment statements if everything matches up with your year-end report. But there is one big exception that always trips up people: You need to hold onto the statement showing the date and purchase price of stocks or funds you bought until you sell the investment, which could be for years. And keep those year-end statements showing your reinvested dividends and capital gains distributions until you sell the stock or fund, so you can add that to your basis and won't get taxed twice. For more information about these rules, see Warning for Mutual Fund Investors. Also keep records of non-deductible IRA contributions until you withdraw the money -- which also could be decades in the future -- so you don't pay taxes on that money twice. Advertisement It's also a good idea to keep home improvement records until you sell the house. You might want to show prospective buyers all the work you've put into the house, and you might need to use the receipts to lower any tax bill when you sell the house. If you live in the house for at least two of the past five years, then you probably won't have to pay taxes on your home-sale profits. In that case, single people can exclude up to $250,000 in profits from taxes; married couples can exclude $500,000 in profits. But if you don't live in the house for that long or make more money on the sale, you will have to pay capital gains taxes on at least part of your profit. Then, the home improvement receipts can help you lower your tax bill because you'll be able to add major improvements to your tax basis and lower your taxable gain. See my column for more information about the tax rules for home sale profits. And you may need to add to your records. Now that you no longer receive canceled checks automatically in the mail with your bank statement, take a look at your bank records online every month and print out canceled checks that you may need to keep for tax purposes, records or large purchases, home improvement records, charitable gifts or other reasons. Otherwise, you may have to pay the bank a fee to get canceled checks if several months have passed. For more tips on tracking down lost paperwork for your taxes, see Head Into Battle With Backup. For more information about some of the records you'll need to keep, see Track Down Your Tax Records. And, finally, be very careful about how you dispose of all of these records, so you don't create a treasure trove for identity thieves. When tossing anything with your social security number or credit card numbers, it's best to get a shredder. Got a question? Ask Kim at firstname.lastname@example.org.