Friday, April 15, 2011

Is It Finally Time To Get Organized?

With tax season almost over it's a great time of year to go through our files and get organized. I have just gotten all my paperwork back from the accountant and i would like to get organized. But what should I keep and what should I throw out?

WhatHow Long to KeepWhy
Tax returns (including receipts and supporting documents)Up to six full yearsThe IRS can audit a return up to three years after you've filed. The agency can challenge your return for up to six years if it suspects you under-reported your income by 25% or more.
IRA contribution recordsPermanentlyKeeping these forms — like IRS Form 5498 and 8606 — may prevent you from paying too much tax when you tap your retirement stash.
Investment and real estate recordsSeven years after you sellThey help track your cost basis — and the taxes you owe when you sell; shred your monthly statements and save the annual summaries.
Bank statements and checksOne month to seven years, depending on whether your bank has them available onlineYou could need them if you're audited by the IRS. If you haven't already, switch to receiving your bank documents online. Your bank may have past statements available online.
Credit card statements and bills for non-deductible itemsShred immediately after the next statement arrivesYou don't need them once you confirm the charges and have proof it was paid.
Form W-2: Wage and Tax StatementUntil you start receiving Social Security benefitsUsually your best proof of earnings for Social Security
Pay stubsUntil the end of the yearNot needed once you get your W-2
Insurance policiesUntil they expire — except for liability policies with "occurrence" coverageOccurrence-based policies cover you for damages that occur while the policy was in effect — even if the claim happens after coverage expires.
ReceiptsDay-to-day debit/credit: Toss after confirming the amount charged is correct.
  • Big-ticket item: Keep with other purchase documentation for proof of value in case of loss or damage.
  • Charitable donations: Store and keep for tax-filing purposes.



Depending on the type, amount and reason for the purchase, they may be necessary for insurance- and tax-filing.


Needless to say keeping documents safe means either a fireproof safe or a safety deposit box. There are many new services that will scan your documents for storage online or on disks. Try Shoeboxed.com


Shoeboxed.com - Scan Receipts and Business Cards

2 comments:

  1. Dave, We are moving this summer and purging like there is no tomorrow. I can't believe how much stuff we have and the abundance of paper. Lot's of it needs to go!

    ReplyDelete
  2. With tax season almost over it's a great time of year to go through our files and get organized. I have just gotten all my paperwork back from the accountant and i would like to get organized. But what should I keep and what should I throw out?

    ReplyDelete

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