Use At-Home Time to Organize Financial Records!

We’ve all been spending a lot of time at home lately, and here’s a good way to use some of that time productively: Organize your financial records! Here is a guide for dealing with your sensitive information, documents and financial records:

Keep Forever

Never throw out items that prove who you are. They can be expensive and difficult to replace. Keep them in your safe deposit box.

  • Birth Certificates
  • Social Security Cards
  • Citizenship Papers
  • Adoption Papers
  • Death Certificates
  • Marriage Certificates or Divorce Decrees
  • Retirement/Savings Plan Statements (until you retire or the account is closed)*

Certain kinds of documents are best kept until something is paid for or sold. Keep your home deed or vehicle title until those are sold. Receipts from large purchases (jewelry, appliances, cars, collectibles, furniture, computers, etc.) should be kept for insurance purposes as proof of their value in case of loss or damage.

*Some advisors recommend keeping your Roth Individual Retirement Account (IRA) contribution records until you withdraw all of the funds. These prove that you have already paid taxes on this money.

The 7 Year Rule

Taxes. The IRS has three years from your filing date to audit your return if it suspects good-faith errors. The three-year deadline also applies if you discover a mistake in your return and decide to file an amended return to claim a refund. The IRS has six years to challenge your return if it thinks you under reported your gross income by 25% or more. Keep these tax-related items for seven years:

  • Tax-related receipts
  • Tax-related cancelled checks
  • W-2s
  • Records for tax deductions

Homeowners. When it comes to record keeping for your house, keep all records documenting the purchase price and the cost of all permanent improvements, such as remodeling, additions and installations. Keep records of expenses incurred in selling and buying the property, such as legal fees and your real estate agent’s commission, for seven years after you sell your home.

Shred After a Year

Keep for a year things you receive on a monthly basis. Many of these documents are available online if you need to retrieve them later. Examples include:

  • Bank and credit union Statements
  • Paid Medical Bills

Shred After 30 Days

Keep for a year things you receive on a monthly basis. Many of these documents are available online if you need to retrieve them later. Examples include:

  • Pay Stubs
  • Checks deposited through mobile apps
  • ATM slips
  • Utility and phone bills

Following these simple guidelines and maintaining your records is important. Find an organization system that works for you and make time for proper record keeping.