Paper Records: What to Toss, What to Keep
You can deep-six most of your documents and go digital with the rest.
Worried about pitching documents that they may need at some point, many people decorate a spare bedroom with boxes or large file cabinets stuffed with old bank statements, tax returns and pay stubs. (Okay, if the stash isn't in a spare bedroom, perhaps it resides in the attic, basement or garage.) After you finish up your tax return this year, take the opportunity to clean house. With a few key exceptions -- mainly tax-related documents -- you don't need to keep all those papers. And if you're willing to use online banking and create a digital archive of crucial records, you may even be able to go paper-free.
Before you dig into those piles of records and statements, invest in a shredder to guard against identity theft. And don't skimp on the shredder, or you'll defeat the purpose of having one. Ribbon-cut models produce bands that can be taped back together. So shell out the money for a cross-cut or confetti model. We like the Fellowes Powershred DS-2 (about $100 online) for its sharp look and munching capability.
What to Keep
The most important documents to hang on to are your annual tax returns. You should keep the actual returns forever, but you can get rid of the supporting documents after three years. That's how long the IRS has to initiate an audit. Once the time elapses, toss the records -- and shred any that reveal your Social Security number or other personal information.
Other papers to save for at least three years include thank-you letters from charities and year-end investment statements. You don't need to save your monthly mutual fund reports forever. But before you toss them, wait for the year-end statements and make sure they match up. Also be sure to keep records that show the initial purchase price for stocks and mutual funds so you can calculate your basis when you sell them. After that, you can shred the documents once the three- or six-year IRS window draws to a close.
You also need to save records pertaining to your house as long as you live in it. Records showing your purchase price, and what you spent on improvements, may come in handy when you're trying to prove the value of your home to potential buyers. Another reason to keep these papers: If you sell your house at a hefty profit (more than $500,000 for couples filing a joint return or $250,000 for single filers), certain expenses can be used to lower your tax bill. After you sell the house, keep the documents for three years.
Finally, hold on to records showing how much money went into and came out of IRAs and 401(k)s -- especially if you've made any nondeductible contributions -- so you don't overpay taxes when you withdraw the money. Keep any 8606 forms on which you reported nondeductible contributions to traditional IRAs.
What to Toss
So what can you unload? ATM receipts, bank withdrawal and deposit slips, and credit-card receipts can go through the shredder after you've checked them against your monthly statements. Rebecca Eddy, founder of Eddy & Schein In-Home Administrators for Seniors, says one client kept every single pay stub she had ever received. That's overkill. Just keep them until you get your Form W-2. You can also get rid of paper copies of most monthly bills -- for credit cards, utilities and cable TV -- unless you need them for tax purposes.
If you need help sorting through the clutter, consider hiring a daily money manager. Daily money managers tend to have a background in accounting, finance or law, and they make house calls. You can find one in your area by checking with the American Association of Daily Money Managers. Typical cost: up to $150 an hour.
This article is part of a series related to being Financially Fit
- ► 2015 (130)
- ► 2014 (599)
- ► 2013 (678)
- ► 2012 (1516)
- ► 2011 (1293)
- truth about gridiron
- Reem Al Numery
- '비타민' 니코틴 해독에는 양파가 '최고'
- letter to
- 美 대학 럭비 주장, '부담감 이기지 못해 자살'
- given your criteria
- <의학> 현미, 혈압 떨어뜨린다
- 야구는 미식축구랑 같이 관전하기에 진짜 제일 지루한 스포츠인듯...
- 8도 사람 성격표현- 4자성어
- How do I disable the Welcome Screen in Windows Vis...
- [건강칼럼]목소리는 건강의 바로미터
- tax payer, paper you should keep.
- Tips...to get good sleep
- Surprisingly Underpaid Celebrities and Other High-...
- 수분부족이 비만을 유발한다?
- [똥개] 경상도가 아닌 타지역 분들에게 묻고 싶은거..
- 대구(경북)사투리랑 부산(경남)사투리의 차이~
- ▼ April (18)