As we all struggle to pull together the previous year’s financial records, often we find ourselves wondering “How much of this stuff do I really need to hold on to?” This easy reference guide will help you decide what to keep, and what to toss!
PERMANENT PERSONAL RECORDS
You should keep the following documents INDEFINITELY (forever!):
- income tax returns
- income tax payment checks
- investment trade confirmations and statements
- important correspondence
- legal documents
- retirement and pension records
- CPA audit reports
PERSONAL TAX RECORDS
Hang onto these records for SIX YEARS:
- supporting documents for tax returns
- accident reports and claims
- medical bills (if tax-related)
- sold property records, contracts, receipts
- sales receipts (if tax-related)
- utility records (if tax-related)
- other bills (if tax-related)
- settled accident claims
SHORT-TERM PERSONAL TAX RECORDS
Hang onto these records for THREE YEARS:
- credit card statements
- medical bills (in case of insurance disputes)
- utility records (for internal use)
- expired insurance policies
PERMANENT BUSINESS RECORDS
You must keep the following documents FOREVER (yes, forever!):
- income tax returns
- income tax payment checks
- annual financial statements and books of account
- corporate documents (incorporation, charter, by laws)
- stock records & retirement / pension records
- licenses, patents, trademarks, and registration applications
- investment trade confirmations and statements
- documents substantiating fixed asset additions
- important correspondence & legal documents
- CPA audit reports
BUSINESS TAX RECORDS
Hold onto this paperwork for SIX YEARS:
- bank reconciliations and voided checks
- canceled payroll and dividend checks
- personnel and payroll records
- purchase & sales records
- travel & entertainment records
- supporting documents for tax returns
- sold property records, contracts, receipts
- sales receipts (if tax-related)
- utility records (if tax-related) & other bills (if tax-related)
- vendor invoices
IN-HOUSE BUSINESS RECORDS
Keep the following documents THREE YEARS:
- monthly financial statements (for internal purposes)
- credit card statements
- utility records (for internal use)
- employment applications
- expired insurance policies
SPECIAL CIRCUMSTANCES
You should retain these records according to the following guidelines:
- car records (until the car is sold)
- credit card receipts (until verified on statement)
- insurance policies (for the for life of policy)
- mortgages / deeds/ leases (6 years past life of agreement)
- pay stubs (until reconciled with your W-2)
- property records, contracts, receipts (until property sold)
- sales receipts (life of warranty or the life of the item)
- stock and bond records (6 years beyond selling)
- warranties and instructions (for the life of product)
- other bills (until payment is verified on the next bill)
Experts advise that most items which fall into the “Permanent Records” category should be kept in a safe deposit box or a fireproof safe. In addition, keep a written inventory of valuable papers in a home storage file. Give a copy to a trusted friend and update it annually. Your real goal should be to keep from accumulating so much paper in the future. You may think that you have no control over the mountains of unwanted paper that come to your home or office, but you’re wrong. You can request to have your name REMOVED from the mailing lists that solicitors buy - effectively cutting off up to 75% of the junk mail that you get! Contact the following organizations:
· DMA Mail preference service (PO Box 9008 / Farmingdale, NY 11735-9008)
· Stop Junk mail Association (800-827-5549)
· Private Citizen (800-cut-junk)
· Haines & Co./Criss-Cross Directory (8050 Freedom Pkwy. NW / N. Canton, OH 44720)
· Consumer Research Institute/Stop The Junk Mail Kit (PO Box 612 / Ithaca, NY 14851)
Just because you cleaned it out, does not mean that it goes in the trash! Did you realize that once you put anything out in the garbage, it becomes public property? And reports of IDENTITY THEFT are increasing every day - when someone else gains access to your personal records and pretends to be you to take out loans, charge credit card bills, and run up a tremendous amount of debt in your name. It can take years to clear up the legal and financial problems this causes you, and it can temporarily ruin your credit. Any paper that contains account numbers, your social security number, or any other sensitive information should be SHREDDED.
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