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Which Financial Docs Are OK to Chuck? Comments

  • By Lisa Zaslow
  • January 28, 2013

notebook and coffee

Every year around tax time, you face the same stack of old folders and files—and every year you ask yourself: Which ones can I toss? Here's the lowdown:


ANNUAL WEEDING
After the end of the calendar year, many of the year’s papers can be pruned away:
Tax-related records—Seven years is the magic number when it comes to holding on to supporting tax documents in case of an audit. Keep your tax returns, but shred records from 2003 and earlier, including:

1099s
Bank statements
Cancelled checks
Charitable contribution records
Credit card statements
Mortgage interest statements
Receipts for expenses
Records of deductions taken
W-2s

By and large, this applies to small business owners as well. Before purging, call your accountant to discuss your particular needs. Pay stubs—Since your W-2 form summarizes all earnings for 2010, you can shred last year’s pay stubs and any lingering older ones. Interim investment statements—Shred all those 2010 monthly and quarterly statements now that you’ve gotten the annual summaries. Medical records—Consider tossing medical docs for minor matters that have been resolved and reimbursed. No need to keep every allergy prescription or test result.

RE-SEEDING
At various times during the year, policies, leases and contracts come up for renewal. When you file the renewal, toss the older version immediately.

Insurance policies—car, home, life, medical, pet, etc.
Leases—car and home
Licenses, registrations, certifications, and memberships
Social security statements (you only need to keep the most recent one)

 

SPRUCE UP
Upgrade from brown cardboard boxes and plain-vanilla manila folders by bringing a little spring spirit to your paperwork with pretty products at www.SeeJaneWork.com, www.ContainerStore.com and www.Organize.com When your supplies look cheery you’ll be more likely to keep up with your filing throughout the year.

MAINTAIN YOUR PERENNIALS
Note that the following are long-term keepers: Records of retirement contributions made—until you hit retirement. Proof of home improvements and expenses associated with the purchase—for when you sell your house. Investment purchase records—to determine capital gains/losses when sold.

If your clear-out results in a mountain of sensitive stuff that should be shredded, call in the pros. Using a shredding company to destroy your documents will save you hours of time. Get a recommendation from an accountant or professional organizer. Or call your local Staples: some stores will shred in bulk, and it's not expensive.

Organization expert Lisa Zaslow is the author of “Can’t I Just Shred It All? 101 Quick Tips to File—and Find—Your Important Papers”, available at www.101filingtips.com

Tagged in: Taxes

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