Ok friends let’s talk about organizing all that paperwork! What should you keep, and how long do you need to keep it for? Since I am not an expert at everything I did a little research for us. Consumer Reports (consumerreports.org) has a great article on the details under their tax information titled “how long to keep tax documents.” I’ll paraphrase it for you down here. According to experts Greg McBride of Bankrate, and Barbara Weltman of Big Ideas for Small Business, here is how long you should keep everything.
THINGS TO KEEP FOREVER:
1. Birth Certificates
2. Social Security Cards
3. Military Discharge Papers
4. Marriage Certificates
5. Divorce Decrees
6. Death Certificates
7. All those details we talked about in “Real Talk” - estate planning documents, your health initiatives, life insurance policy information, documents about your pension and health benefits - ok we didn’t cover all of these but you get the picture.
8. They also recommend keeping an inventory of what’s in your bank safe deposit box if you have one.
THINGS TO KEEP FOR A YEAR OR LONGER:
1. Car Titles - keep until you sell them (duh!)
2. Loan Documents - the article says to keep them until you pay them off but I’m going to go one step further and say keep them until you pay the next round of taxes since they will want to know if you paid interest during the year on this item - I did that one myself and it was not so fun to try and figure that out once tax season showed up!
3. Investments (stocks, bonds, mutual funds, etc.) - the article says to keep purchase confirmations until you sell them but again I would recommend keeping them until you file those taxes - I actually keep a file all year round labeled “taxes” so if I were you I would just move these and the loan documents from above straight into that taxes folder so you’re all set when tax time comes
THINGS TO KEEP FOR LESS THAN A YEAR:
1. ATM, bank deposit and credit card receipts until you reconcile them with your account - then either add them to that taxes folder if needed or shred them - many stores like Staples and Office Depot will shred your items for free with a coupon you can find on their websites, otherwise the cost is usually $1 per pound
2. Insurance Policies - until you receive the new one
3. Investment Statements - until you receive the new one
It’s important to note that the government has six years to audit you on your taxes so make sure to keep at least seven years of taxes ready just in case. Also I always assumed that the IRS was auditing people whose taxes look incorrect, but they do random audits as well, so it’s best to be prepared. Fingers crossed none of us will have to deal with this though!
Now how should you store them? Well that’s where I come in. I have mine divided into two sections. One is the long term storage I don’t really access - like those taxes - and I have it stored in a secure, storage box with a lid. This can also be stored away in an area that is less accessible like the top shelf in one of your closets.
The other is the items I do access throughout the year - like my insurance policy information - which I have in a desktop file storage box. This is where I keep my taxes folder, and also any product guides I have on hand, for example the guide to your microwave, blender, stand mixer, phone, computer, camera - I think you get the picture.
It’s also a great idea to keep a folder for warranty information that is easily accessible in case something breaks and needs to be replaced. Check out my warranty keeper to help manage this!
In addition to these, I also keep all my mailing supplies - stamps, return address stickers, envelopes, etc. - in a folder since I don’t have a desk in my very small apartment
And finally, and most important, is that it is essential to get a fireproof lockbox for the big stuff like your birth certificates, social security cards, passports, death certificates - basically those items that if destroyed would cause you a huge headache to replace, and those items you really don’t want just anyone getting their hands on.
This is a great time of year to go through your current folders and eliminate anything you no longer need, prepare folders or space for new files you will need, and also prepare for filing your taxes.
Doing this in January every year ensures you don’t let things pile up and end up with paper everywhere!
Trust me, everyone will thank you!
XOXO, Kylie