Now that we've somehow survived another tax filing, it's the perfect time to implement a new program for keeping and destroying (yes, you can) your personal finance papers. I'm sharing a checklist of what you need to save and for how long.
Permanent papers:
(These should be stored in safe deposit box at the bank or in a fireproof box.)
Birth, marriage & death certificates, separation or divorce final judgments, adoption papers.
Passports.
Wills & health care proxies.
IRA & 401(k) beneficiary-designation forms. (These forms control what happens to the money when you die. You can get copies from your plan custodians.
All current insurance policies.
Long-Term Papers:
(These should be stored in a file cabinets or in file boxes.)
Federal & state income-tax returns & all supporting documents (which includes receipts for business expenses, charitable contributions, casualty losses & canceled checks for any other tax-deductible expenses. Usually, you don't need to keep these papers for more than three years because that's how long the IRS has to audit a return & the clock starts ticking the return due date. However, the IRS can go back 6 years if it has reason to believe you've under-reported your income by more than 25%. Also, if you claim a loss for worthless stock, save those papers 7 years. Shred support documentation after the statute of limitations expires. Keep copies of tax returns for your personal financial records, but don't panic if you haven't. Copies can be bought from the IRS.
Short-Term Papers:
Monthly statements from your bank, broker, mutual funds, 401(k), other retirement plans & college savings plans.
Investment papers confirming that you bought, sold or transferred holdings.
Pay stubs.
***Shred all the short-term papers listed above once you get your year-end statements. Keep annual statements at least 3 years.
Credit card statements. If they contain tax-deductible expenses or charitable contributions, keep them with your tax paperwork. If not, pay them and shred them.
Utility & telephone bills should be put in the shredder once they're paid.
ATM receipts & deposit slips should be shredded as soon as they appear on your bank statement.
(Information posted above taken from Parade Magazine, Page 8, March 16, 2003.)
Comments(3)