Getting Rid of Tax Related Clutter

// March 24th, 2013 // Household Hints, Tips for Living, Uncategorized

In the previous article we explained how to amass this volume of documentation needed to file your taxes and keep Uncle Sam happy. This article addresses how to get rid of all of that clutter and paperwork. You have to have a system to organize the good stuff, know what you can throw away/shred and what needs to be saved for a while or forever.

1. Set Up a Filing System

a. Get a file cabinet/file box
b. Collect all essential papers and bills like; checking account records, insurance papers, receipts for major purchases etc.
c. File them alphabetically – but also in order of usage. Therefore files you seldom use or probably will never need unless audited or have a major loss go at the back of the file box. Files you use more often such as checking account bills should be located more towards the front.
d. Make tabs for the categories such as household repairs, vacation, and medical documents.
e. Keep extra file folders at in the back of your box so they are handy next time you need one.

2. What can safely be thrown away

a. Outdated warranties
b. Outdated instruction manuals
c. Outdated wills or trusts
d. Cancelled/expired insurance policies – if you had no claims
e. Records for items you no longer own (boat, car motorcycle)
f. Pay stubs going back more than 5 years
g. If you have a question about a specific item consult your account or lawyer first
3. What to Save Long Term
a. Copies of bank statements that provided documentation for tax deductions or major purchases
b. Purchase and sale documents for every home you’ve owned
c. Credit card records (keep them for 6 years)
d. Health records
e. Contracts (keep for seven years past the expiration date)
f. Loan papers (keep for three years after the final payment)

 

Remember: Buy a shredder and shred all unneeded documents that have personal and private information on them. Identity theft is a real problem and incredibly difficult to correct!!!!

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