As I work with clients, a common issue that most of them face is document management. I can't stress enough that you best friend when working on paper management is a sleek and dependable shredder ! However when it comes to dealing with the IRS we must still keep some document handy. Below are some guidelines which I hope can help you decide what to keep and what to throw away. For more information speak with a financial expert or your accountant.
To make it easy, I divided the paper load in three categories:
- Annual tax returns
- Year-end summaries from financial service companies
- Stock and bond certificates
- Deeds of property and ownership, auto titles, insurance policies
- Home improvement records
- Health records, wills and powers of attorney
- Birth certificates, adoption and custody records, death certificates
- Paycheck stubs; phone and utility bills for one year (or seven years if business-related); monthly bank and credit card statements for one year; and monthly mortgage statements for one year- however if you ask to receive these bills/statements via e-mail, it will be one less thing to keep around the house.
- Brokerage or mutual fund statements until they’ve been reconciled at year end
- Year end statements from credit card companies for seven years
- W-2 and 1099 forms for seven years
- Cancelled checks and receipts for all tax-deductible expenses for seven years
3- Discard and/or shred
- ATM, bank-deposit slips and credit card receipts after cleared on a statement
- Non-tax deductible receipts for minor purchases
- Old magazines and articles not read within the past three months
- Receipts, instructions and warranties for items you no longer own (or warranties that have expired)
Keep breathing through the process and remember that just like all yoga poses, you've got to start somewhere.