Documents To Keep

"Clients of The Yeatman Team can have peace of mind that we will retain copies of all important documents as well. If you misplace anything; simply call us for a copy!" ~ Jane

Getting Out of Debt

Paper Records: What to Toss,
What to Keep

Worried about pitching documents that they may need at some point, many people decorate a spare bedroom with boxes or large file cabinets stuffed with old bank statements, tax

returns and pay stubs. (Okay, if the stash isn't in a spare bedroom, perhaps it resides in the attic, basement or garage.) As you finish up your tax return this year, take the opportunity to clean house. With a few key exceptions -- mainly tax-related documents -- you don't need to keep all those papers. And if you're willing to use online banking and create a digital archive of crucial records, you may even be able to go paper-free.

 

Before you dig into those piles of records and statements, invest in a shredder to guard against identity theft. And don't skimp on the shredder, or you'll defeat the purpose of having one. Ribbon-cut models produce bands that can be taped back together. So shell out the money for a cross-cut or confetti model. We like the Fellowes Powershred DS-2 (about $100 online) for its sharp look and munching capability.

WHAT TO KEEP 
The most important documents to hang on to are your annual tax returns. You should keep the actual returns forever, but you can get rid of the supporting documents after three years. That's how long the IRS has to initiate an audit. Once the time elapses, toss the records -- and shred any that reveal your Social Security number or other personal information.

Other papers to save for at least three years include thank-you letters from charities and year-end investment statements. You don't need to save your monthly mutual fund reports forever. But before you toss them, wait for the year-end statements and make sure they match up. Also be sure to keep records that show the initial purchase price for stocks and mutual funds

so you can calculate your basis when you sell them. After that, you can shred the documents once the three- or six-year IRS window draws to a close.

Finally, hold on to records showing how much money went into and came out of IRAs and 401(k)s -- especially if you've made any nondeductible contributions -- so you don't overpay taxes when you withdraw the money. Keep any 8606 forms on which you reported nondeductible contributions to traditional IRAs.

WHAT TO TOSS 
So what can you unload? ATM receipts, bank withdrawal and deposit slips, and credit-card receipts can go through the shredder after you've checked them against your monthly statements. Rebecca Eddy, founder of Eddy & Schein In-Home Administrators for Seniors, says one client kept every single pay stub she had ever received. That's overkill. Just keep them until you get your Form W-2. You can also get rid of paper copies of most monthly bills -- for credit cards, utilities and cable TV -- unless you need them for tax purposes.

 

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Legal disclaimer

The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While The Yeatman Team of Ebby Halliday Realtors has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources,  The Yeatman Team of Ebby Halliday Realtors makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on TheYeatmanTeam.com.

Any legal or other information found here, on TheYeatmanTeam.com, or at other sites to which we link, should be verified before it is relied upon.

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