Paperwork Cleanup Time

Liz Westin, contributing MSN columnist, has a list to help you purge your financial clutter which you may find useful. The complete article can be found at http://money.msn.com/how-to-budget/how-to-purge-your-financial-clutter-weston.aspx.

We’ve put together a brief synopsis for you below.

The IRS accepts electronic records, so destroy all that paper clogging your storage areas by following some of the following tips:

  • - Scan receipts.
  • - Download documents (check with your bank, credit card company, brokerage firm for policies about on-line access to records).
  • - The IRS has 3 years to audit your return unless a substantial error is found in which case they can go back 6 years. After this time has passed shred your supporting documentation but scan or keep your paper return indefinitely. There is no deadline for fraud or failure to file. Additional information regarding IRS Audit FAQ’s can be found on the IRS website – http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/IRS-Audit-FAQs.
  • - Scan or keep actual tax returns in case your heirs need the information.
  • - Keep W-2 forms until you draw Social Security. Again, these can be scanned, no need to keep originals or paper copies.

Retirement Account Tax Forms to Keep

  • - Form 8606 (helps calculate tax basis for future withdrawals from retirement plans).
  • - Form 5498 (IRA and Roth IRA contributions).
  • - Form 1099-R (Shows IRA withdrawals).

For loans, destroy monthly and/or quarterly statements when you get the year-end summaries. Once paid off, destroy the year-end summaries, but keep the final paid-off notices indefinitely. Also, keep appraisals and receipts for big purchase items until you no longer own them. You should also keep back-ups on thumb drives, CDs, or external hard drives and keep them with a relative or safe-deposit box.

Certain documents should be kept for life such as

  • - Birth certificates
  • - Death certificates
  • - Marriage certificates
  • - Divorce papers
  • - Military discharge papers

Other paperwork you can shred unless it’s being used as backup to your tax returns

  • - ATM and bank deposit receipts after reconciliation with bank statements.
  • - Pay stubs after you receive the year-end summary.
  • - Receipts, after three months, for minor purchases.
  • - Credit Card receipts, after checking purchase record, scan if needed for tax purposes.
  • - Utility bills, unless you’re writing off a home office.
  • - Internet and phone bills, unless needed for tax purposes, then scan.
  • - Old insurance claims, if paid, after one year, unless there was a write-off for medical costs or casualty loss on your tax return, then keep with that tax return.
  • - Social Security statements can be shred when you get the new one.
  • - Retirement plan statements from work, keep year-end statements for 401k or 403b. Keep all correspondence for traditional pensions such as defined benefit plans.
  • - Toss expired warranties, repair receipts, owner’s manuals, insurance policy paperwork for what you no longer own or have replaced.

Remember to shred everything with your personal information, credit information or other account numbers to safe guard yourself from identity theft.

The staff at Trager, Kevy, & Trager, LLP hope that this helps you declutter your life and keep your finances in order. Please don’t hesitate to contact us if you have any questions.

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