Tip on Financial Documents To Keep - And What To Toss
It's a paperless world, right? Hah. We think we're good at keeping our records clean, but we're still up to our ears in paper. The wife won't let anything go, even check stubs from the previous century. But don't despair. You can trim down your overweight paper without getting into trouble. Here, courtesy of a public service website from the Texas Society of Certified Public Accountants is a list of financial documents you must keep (and what you don't have to):
Keepers:
Your will, living will and durable power of attorney. Life insurance policies, including policies with your employer. Insurance, and any death benefits that are due you as a veteran of the armed services. Retirement plan documents from your pension, profit sharing, 401(k), and IRAs, along with annual statements. Records of nondeductible contributions made to your employer-sponsored retirement savings plan or IRA. Separation and divorce documents. Real estate deeds, titles and property surveys. Military records. Tax returns and supporting data for at least the last seven years after the original return is filed. For investments, keep buy/sell trade confirmations to show when each security was bought and sold, the price you paid and commission charged. Dividend reinvesting statements (for seven years after you file your tax return showing a gain or loss( Receipts for major purchases like jewelry, furniture, etc. Receipts for items under warranty until the warranty expires. Pay stubs – until the end of the year when you compare the year end totals with the amounts shown on the W2 form you get from your employer.
Tossers:
Receipts of bank deposits and ATM transactions – once you receive your bank statement and verify that the transactions were properly posted to your account. Canceled checks – save only those needed as support for tax purposes. Bills – once you’ve paid them and verified that the checks have been cashed. Monthly or quarterly brokerage statements – if your annual yearend statement summarizes all transactions made during the year. Credit checks on employees (even housekeepers and nannies) – in accordance with Fair and Accurate Credit Transactions Act.
The accountants' final tip: Always shred financial documents when they’re no longer needed, along with destroying pre-approved credit card offers. The best price we found on a home document shredder was $14.99, but office-quality machines can top $4,000, so shop around, and don't buy what you don't need.
Comments
I disagree with the "toss your bills after the check has cleared." Keeping old bills, particularly on things that are changeable (like utilities), is helpful in knowing how to budget in the future.
i was always under the impression that you should keep your old bills for at least a year to prove your payment hx, primarily for when you move and the electric co. and stuff. If not, then i can save a lot of time and shred a lot of paper
Notarized docs like Deeds, Wills, Powers of Attorney you'd have to keep but If you're trying to go paperless you should scan most of those other documents into PDFs. I also agree with the previous comment. Unless you're using some accounting software, you'd do well to keep old bills but you could scan those too.
I'd suggest keeping monthly or quarterly financial statements. Many institutions don't send yearly statements. Otherwise I agree especially about the importance of shredding documents.
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I have found that the best thing to do for "disposable" documents like bills and bank statements is to scan them immediately then shred. That way, you still have the files, but you're paperless at the same time. Check with your tax accountant, but it is my understanding that the IRS is starting to except receipts that have been scanned and re-printed. And organizing digital files is much easier than organizing paper files.
Oh, and another thing. These days most banks and vendors (cell phone, credit cards, etc) have statements online and the option to go paperless. I don't get any bills/statements in the mail anymore. I simply go online and download the pdf -- nice! By the way, to keep all this stuff organized, I use Yep
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I'd be careful with this advice. It may be correct for the typical person, but there are exceptions. For example, I'll be applying for a visa under the "highly skilled migrant programme," which requires **original** pay stubs and bank statements verifying the pay stubs, among lots of other documentation.
Precisely. I kept my pay stubs for the past ten years. This served me in good stead when I applied for my Green Card, because two of the companies no longer existed so the INS couldn't verify employment, and the stubs along with my tax returns showed I did indeed work at those places.
Most larger companies are going to paperless pay stubs so you may not even have the option to get them in paper. Banks you can opt out of paper and download statements, makes things a lot easier. Also don't write checks, use electronic payments from your bank's web site, then no cancelled checks to worry about. Same with ATM receipts, once the transaction has left pending then you can destroy them, no need to wait a month for a statement.
With monthly utility bills most utilities you can download account history as well so no need to save those either, if you want to budget then download your history, drop it in a spreadsheet and avergae, much less work that way. My electric company web site will allow the last three years to be downloaded.
Most larger companies are going to paperless pay stubs so you may not even have the option to get them in paper. Banks you can opt out of paper and download statements, makes things a lot easier. Also don't write checks, use electronic payments from your bank's web site, then no cancelled checks to worry about. Same with ATM receipts, once the transaction has left pending then you can destroy them, no need to wait a month for a statement.
With monthly utility bills most utilities you can download account history as well so no need to save those either, if you want to budget then download your history, drop it in a spreadsheet and avergae, much less work that way. My electric company web site will allow the last three years to be downloaded.
Also with receipts I keep them even after the warranty has expired filed away in a fireproof safe for insurance purposes.
As an organizing expert, I am still not sure how LONG to keep trade confirmations. I know it says to keep them, but do my clients have to keep them indefinitely? Thanks!
Monica Ricci
Absolutely keep all trade confirmations indefinitely. A safe defininiton of "indefinite" is after all securities and spinoff securities have been sold and money received. You will need the cost basis for tax purposes and you will want to track the various lots of securities, especially if you buy through a dollar-cost-average progam.
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It's not counterintuitive if you read the note at the bottom: "For documents in a safe-deposit box, it's a good idea to keep copies at home as well.
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A blog which doesn’t allow comments is still a blog. When I started blogging over six years ago, there were many many blogs already. Yes, I know it seems to many as if in the year 2000 you had to hunt around to find a blog. You didn’t. They were “everywhere”. Most have just closed down since then.
In response to an Aug 17 statement, I guess you can find information that you are NOT looking for anywhere you go and if you think about it, I'm sure the stretching would be terribly painful. Probably would be cheaper using a string and a can of soup. But that might be what you get for your money anyhow. Buyer beware.
What about cash paid in at the bank branch to a business account (sole trader) by myselft? For tax purposes, do I have to keep the receipts or the monthly bank statement is fine?
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