What to Keep and Why
As you stare at the sinister stacks of papers piled up on your dining room table, you wonder: how long would it take me to locate my car title, the warranty on my air conditioner, and all the papers I’ll need to support my 2015 tax return?
How do you keep track of your important documents? Are they properly filed and labeled or are they sitting there like Mount Everest daring you to tackle them? While each of us has our own way of organizing our paperwork, it's not uncommon to be confused as to what papers we should keep and how long we should keep them. Here's a guide to help you decide what to save and what can meet its end in your shredder:
Keep these things forever:
Marriage licenses, birth certificates, death certificates, adoption papers, wills, military service records and discharge papers, divorce decrees, real estate records, and life insurance policies are all hard-to-replace documents that you should keep, preferably in a safe-deposit box. You may wish to make copies for home use.
What about tax records?
It's recommended that you keep your tax returns forever, but you may shred the supporting documents after 7 years.
Have a January shred fest
You should keep your monthly bank statements, credit card statements and your loan and mortgage statements for a year. Once you've received your year-end statements and have confirmed that they’re correct, keep those and then shred the monthly statements. Since these yearly statements may be needed to prove tax deductions to the IRS, save the yearly statements for 7 years. Likewise, save unpaid medical bills until they’re paid off and then save the proof of the final payment for one year (7 years if you've taken the medical deduction on your taxes).
Pockets full of paper?
Keep ATM slips until you've received your bank statement to verify the amounts and then shred them, since some may have your full bank account number. Retain your last paycheck stub to compare to your W-2. As for sales receipts, keep those for items you may wish to exchange or those that have warranties. If the receipts are needed for tax purposes, then organize them by category (i.e. travel expenses, tools, repairs, and so on).
Tips on reducing clutter:
- Signing up to receive electronic bills and statements is as easy as registering on each company's website and could save your household from accumulating as much as 6.6 pounds of paper per year. While you may be able to access the statements later, it makes sense to download them to your computer for your personal convenience.
- Check out this link about stopping unsolicited emails and phone calls to get off those junk mail lists.
- Are you using your cell phone to its full advantage? Since you're taking your phone everywhere, reduce paperwork by taking photos of work schedules, school menus, recipes, etc., rather than printing a copy. Use note-taking apps to make your to-do lists, shopping lists, and so on.
Getting your paperwork together at tax time doesn’t have to be an uphill climb. With some organization, you can reach the summit in no time. We aren’t tax professionals or accountants so for more information or specific questions, you should consult your accountant or tax preparer, and the IRS website.