It's that time of the year when we are mulling through our documents and paperwork getting ready for tax time. Are you taking adequate measures to protect these documents from fallilng into the wrong hands or being lost in a natural disaster? Do you know how long to keep tax records? Do you know the best way to protect vital paperwork from fire and flood damage? Do you know what type of paper shredder is recommended to completely destroy documents?
- Tax returns and supporting documents need to be kept for the previous seven filing years.
- Keep pay stubs and records until the end of the year to confirm your 1099 or W-2 forms are correct.
- Warranties and original receipts for warranted items should be set aside at least until the warranty expires.
- Essential documents to keep in a safe deposit box with a copy in your locked local file/safe:
- Birth Certificates
- Social Security Cards
- Living Wills
- Power of Attorney documents
- Insurance policies
- Real estate titles and deeds
- Car titles
- Retirement plans
- Investment trade confirmations
- Military documents and veterans benefit awards
- You can also send copies to a family member out of state.
- Be sure to have one person or trusted advisor who knows the contents and the combination or key location.
- Documents to destroy:
- Bank notices/statements
- ATM transactions
- Pre-approved credit card offers
- Credit card statements
Paper shredders are inexpensive and can be purchased for about $40. Make sure to buy a cross shredder. You might want to consider professional shredding and are completely unrecoverable by others. Professional shredders provide a certificate of destruction to limit your liability. Can be more cost effective than a heavy duty shredder. You may also request witnessing documents being destroyed to prevent security risks.
Another solution is to scan these documents into an electronic file and store on CD or hard drive in a safe deposit box before deystroying the file. Do not destroy essential document originals.
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