Toss? Keep? Toss? Keep?

Dear Juli,

Which files and records do I really need to keep? And for how long? ~ Buried in paper that I probably don’t need

Dear Buried in Paper,

This is a great question, especially as tax season is upon us. I will answer with the caveat that if you have something you are uncertain about, it is advisable to ask your tax preparer or attorney. Particular situations may warrant keeping items for different lengths of time and for very real reasons.

My general thought is to rid your life of as much paper as you can. The majority of the items on the following list of paper to keep would fill a single average-sized file drawer, so it’s not as much as it sounds for most people.

I have encountered clients who err on the side of keeping every single receipt they have every received. This can lead to many chaotic issues. I haven’t yet come across a situation in life where you would need to prove that you ate a hamburger from the local drive-thru, so those types or receipts can simply go away.

Some items you can also scan and retain on your computer, which saves space and still makes the data accessible. There are many items which the IRS will accept in electronic form, so nowadays you can keep many records online and in your digital files. Be sure to have a good back-up system in place, however.

There are several important papers that should be kept permanently. Here is a list of the most common ones. You can put them into a file labeled “Important Data.”

Birth, marriage, and death certificates

Adoption, custody, and divorce papers

Citizenship and naturalization papers

Social Security, employment, and military documents

Insurance policies and records

Inventory and audit records

Tax returns and supporting documentation

Real estate records

Keep the following only while the document is still valid, in effect, useful::

Will, passports, burial-lot deed, auto insurance card, auto registration, motor vehicle titles and purchase receipts, licenses, and repair records

The following should be kept up to 6 years after they are no longer relevant for tax purposes:

Stocks, bonds, and other securities

Bank account statements

Cancelled checks

Savings certificates

Credit contracts, records of credit payments, and credit account statements

Deductable expense receipts and records, income and tax payments

You are probably wondering what you can possibly toss out!

Basically any receipt that you don’t need for tax or warranty purposes can go. Duplicates of papers you have a good copy of can generally go. Anything expired, with no tax ramification, can be tossed too. Be careful to properly shred papers with any identifying information that could be used against you (Social Security number, credit card or bank numbers, passwords, etc.).

Don’t be like some people who stuff drawers with every receipt they ever received from the grocery store or fast food restaurant – those need not even come home with you unless you are recording the information into an expense account. And then the receipt should be tossed.

Ask a question relating to anything that has you ‘stuck’ and I will address it at the appropriate time. Email questions to Coach Juli at jshulem@gmail.com and put “question for column” in the subject line, and they will be answered right here. Post a comment too!