Hooray for TAX TIME!! Said no one ever! So how is all the paper scrounging going? Are you feeling somewhat in control of your paper files in preparation of filing taxes? This is always the time of year when the rubber meets the road and we see how organized we really are. There’s nothing like tax time to figure out your midlife paper organization system. Yaaay!! (Said in my best ‘sad, deflating balloon’ voice).
By the time you hit the midlife plateau, you’ve got boxes of old tax returns and filing cabinets full of paperwork that you’re scared to death to trash.
The thought of going through your piles is daunting and just plain unattractive and you’ve got lots of other things to do instead.
There’s also the passing thought of your parents’ home and their filing system, or lack thereof. (This thought is terrifying for me right now.)
(Do your aging parents need some help in this area as well? Give them – and yourself – some peace of mind with my free printable Caregiving 101: Essential Document List at the bottom of this post.)
Della Jane to the rescue!!!!!
These are the ‘rules’ that seem to be standard over the internet. Some are logical, some are a little surprising.
Just like the airplane scenario, if you do have aging parents that you think and worry about, you must ‘put on your own oxygen first, then theirs’. Let’s get our own paper clutter tamed before diving into their offices to do the same.
Here we go:
Keep Forever
- Birth Certificates
- Adoption Records
- Marriage/Divorce Records
- Military Records
- Immunization Records
- Passports
- Social Security Cards
- Updated Legal Documents: Wills, estate plans, living trusts, powers-of-attorney
Keep for 7 Years
- Records of Satisfied Loans – Paid off mortgages, any other loans
- Home Improvement Records – Keep these until you sell the home PLUS 7 years (Generally, we keep these with the tax returns so they would be held for 7 years anyway.)
- Tax Returns (After filing taxes, we put all paperwork in a closed large envelope, then file away in a box. We then take the next tax return from 8 years ago and shred.)
- Brokerage/Investment Records – Keep monthly statements for 1 year, then just keep the annual summaries for as long as you own the investment PLUS 7 years.
- Retirement Plan Summaries – Keep quarterly statements for a year, then keep the annual statements until you retire.
Keep for 3 Years
- Medical Bills
- Canceled Insurance Policies
Keep for 1 Year
- Credit Card Statements – After 1 year, toss these after checking for accuracy.*
- Pay Stubs – Keep for one year, then reconcile with your W2 form. (Then they’ll go in the tax return records envelope for the year.)
- Bank Statements – Keep monthly statements for 1 year, then only keep annual statements related to taxes. They will ultimately be kept for 7 years when it’s filed together in your tax return records envelope. *
- Utility Bills – Keep for one year, then shred. *
- Healthcare Explanation of Benefits (EOB) – keep for 1 year (unless there is a dispute with a medical bill – in which case you can pair up the EOB with the bill and keep for 3 years.
- Vehicle Sale Records – Bill of sale, warranty contract, and lease contract keep for a year after you sell the car.
- Insurance Policies – Keep for a year then shred when they’ve been replaced or you’ve sold the asset. If you make a claim, keep the paperwork for a year after you receive payment. If the claim was tax related, keep that paperwork for 7 years – which is done automatically anyway if you keep the whole tax return paperwork envelope. *
(*) Keep in mind that you DO NOT need to receive paper copies of monthly bills like credit card statements and utility bills. In fact, it’s safer to receive email notifications anyway.
Keep for 1 Month
- Phone bills
- Store receipts – Shred when you’ve cross-checked for accuracy with your credit card.
- ATM printouts
Quick Tip: Keep all home improvement receipts in an easily accessible file throughout the year. For example, this year we had both a house sale and big home improvement expenses on another house. When we received papers, or receipts on these various expenses, we filed them immediately (as soon as we got home) in the tax file. Voila! No scrounging around looking for paperwork.
Another Quick Tip: Make yourself a Bug Out Book to house all your important paperwork that you must keep forever. It’s a simple process and you will always know where these important documents are housed. Visit the post here.
Another Quick Tip: Eliminate all physical paper from entering your home. Opt for email statements from utility companies, banks, and stores etc. More and more retail establishments are offering this choice, and it is a beautiful thing to NOT have to deal with paper at all.
Happy taxes my friends!!!!!
Don’t forget the free printable below Caregiving 101: Essential Document List. Give your parents (and yourself) some peace of mind in getting their affairs in order.
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