Monthly Archives : May 2013

Record Keeping

Record Keeping

Many families are busy spring cleaning their homes this time of year, making it a great time to declutter those financial records by following these helpful guidelines:

Records to keep for one year:

  • Paycheck stubs
  • Bank statements (including cancelled checks)
  • Brokerage statements(keep longer for tax purposes if they show a gain or loss)
  • Credit card receipts
  • Receipts for health care bills (in case you qualify for a medical deduction)
  • Utility bills to track usage (but keep for 7 years if you deduct a home office)

Records to keep for 7 years:

  • Monthly investment account statements
  • Income tax returns
  • Supporting documents for taxes, including:
    • W-2s
    • 1099s
    • Receipts or cancelled checks that substantiate deductions

Note that although the IRS has up to three years after you file to audit you, it may look back up to six years if it suspects you substantially underreported income or committed fraud.

Records to hold while active:

  • Contracts
  • Stock certificates
  • Property tax records
  • Warranties
  • Disputed bills
  • Pension and retirement plans
  • Home improvement records

Records to keep indefinitely:

  • Tax returns with proof of filing and payment
  • IRS forms that you filed when making contributions to a traditional IRA or Roth conversion
  • Receipts for capital improvements that you have made to your home until seven years after you sell the house
  • Retirement and brokerage account annual statements
  • Receipts for big-ticket purchases for as long as you own the item (to support warranty and insurance claims)
  • Wills
  • Life insurance information
  • Mortgage data

Records to toss:

  • ATM receipts once recorded
  • Bank deposit slips once the funds show up in your account

Finally, if you’re having trouble getting organized for taxes, try purchasing a 13 folder accordion file.  Label each tab with that month’s name, and keep that month’s bills, credit card receipts, and bank statements in that file.  Once you’ve completed your tax returns, add a copy in the 13th folder for future records.