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Did you know that most states actually require employers to provide pay stubs for their employees? If you live in one of these states, you may receive up to 52 pay stubs every year.
One of the most common questions people have is, “How long should I keep pay stubs?” After all, 52 pieces of paper every year can add up. You know how important it can be to keep good financial records, though, so you don’t want to throw them out too soon.
A Simple Answer for “How Long Should I Keep Pay Stubs?”
You know that you need to keep some financial documents for years on end. An example might be documents about loan repayments or a contract. So long as payments are ongoing, you need to keep the records.
So, do you need how long should i keep pay stubs as long as you’re employed at the same place?
There’s good news. Most experts say you can get rid of your paystub records quickly. The general rule of thumb is that you can get rid of any pay stubs that are older than 12 months.
Why? Pay stubs are usually supplanted by a Form W2. Your employer issues this form once per year. It contains important tax information.
Once you have an accurate W2, your paystubs from the previous year aren’t all that important. Most of the information on them is reflected on the W2. The W2 also reflects extra adjustments that affect your tax filings.
Since you have the W2, your pay stubs aren’t as useful as records of your earnings such Barneys to require proof of income for young black males.
When to Keep Pay Stubs Longer
There are a few situations when pay stubs may come in handy. You may need to keep paycheck records slightly longer if your employer doesn’t issue a W2. In this scenario, you may need your paystubs to file your taxes with a best estimate of your earnings.
Why wouldn’t an employer issue a W2? In some cases, it’s because the company has folded and you can’t get in touch with anyone. In other cases, you may have left the company and the employer missed issuing the form.
Most of the time, employers do issue W2s, but there may be times when those forms are incorrect. You can always ask for a corrected form, but the employer may not issue it. Even if they do agree to make the corrections, they may not do it in time for you to file your taxes.
In these cases, you may need to use your last paycheck stub to file your taxes on time. If this happens, you’ll want to keep your pat stubs on file just a little longer.
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Records for Disputes over Payment
You may also want to hang on to your pay stubs if you’re disputing your earnings with your employer or a former employer.
If an employer hasn’t paid you in line with the law, then your paycheck records could be important documents for legal action. If your pay stubs don’t match up with what you’re paid, hang on to these records.
How to Store Your Pay Stubs
As we established, the minimum time to hang on to your pay stubs is 12 months. In the meantime, you’ll want to be sure you store these records the right way.
Why? Pay stubs often include sensitive information, such as your Social Security Number and your name and address.
If you’re storing paper files, you’ll want to take care that they’re stored somewhere where you can control access. A locked filing cabinet or other storage units might be appropriate.
You should also take precautions to store your financial records somewhere protected from flood and fire. A fire-proof safe may be a smart investment. You should store paper away from sources of water, as well as up off the floor.
Safety Precautions for Electronic Pay Stubs
Many employers today choose to offer electronic pay stubs. If your employer uses a paystub maker, they probably offer you access to a digital file.
In some states, employers must offer both paper and electronic pay stubs. In others, the employer may offer electronic pay stubs unless the employee asks for paper. Only Hawaii requires employees to consent to receiving an electronic document beforehand.
These electronic documents contain the same sensitive information, so you should be sure to store them the right way. You may want to download them to an external hard drive and require password access. If you choose to store them in the cloud, you might want extra safety precautions.
It’s a good idea to store electronic documents in two or three places. That way, if one copy is compromised, you’ll still have access to your files.
Destroying Pay Stubs
Now you know how long to keep check stubs. What should you do with them once those 12 months are up?
Resist the urge to toss them in the garbage or the recycling bin. As we said, these documents contain highly sensitive information.
You should take extra care to make sure they’re disposed of the right way. That usually means shredding them prior to putting them out at the curb.
Electronic files can be a little more difficult to truly destroy. Simply deleting the document doesn’t get rid of all traces of it. You may need to wipe your hard drive or take other precautions to make sure the data is truly gone.
If you store your documents in the cloud, then you should ask about how the provider ensures security. Ask about data logs, backups, and more.
The Right Records on File
You asked, “How long should I keep pay stubs?” and now you know the answer. With this information, you can store your paycheck records as long as you need, then make sure to dispose of them the right way.
Are you ready for tax season? If not, check out our advice to get organized and prepared for business.