Every January I feel like throwing things away. This includes paperwork from the prior year. It’s probably best to wait until tax time to throw away some things, but January isn’t a bad time to start. Here are some guidelines for purging records:
Things to get rid of right away:
Catalogs, junk mail, receipts for things you aren’t writing off for tax purposes, and utility bills. All of them can go in the trashcan immediately. If you’d like you can save receipts and utility bills until you’ve seen them hit your bank statement, but you shouldn’t need them after that.
Credit card bills:There’s no reason to save credit card bills unless they contain a large ticket item that you want proof of purchase for like appliances (for warranties) or flat screen televisions (for insurance purposes). Once you reconcile your statement with your bank account, chuck it.
Insurance policies:You can trash expired insurance policies as you get new ones. There’s no need to hang on to the paperwork unless you made a claim you wrote off on your taxes. In that case, put that information with the corresponding year’s taxes.
Paystubs: You can throw away paystubs once you have your W-2/1099 for that year. I do recommend holding on to the prior two months in case you want to refinance early in the year. By tax time though, you should be able to throw away the entire previous year.
Mortgage Statements:There’s no need to keep mortgage statements long-term. Once you have the year-end tax information, you can throw that year’s statements away. You should keep each year-end statement for the life of the loan. Once you’ve paid off a loan, all you need to keep is the Pay-Off notice.
Bank and Investment Statements: Keep monthly statements until you have a year-end summary. At that point, toss the monthlies and keep the annuals. When you sell an investment, keep the selling paperwork with the corresponding year’s taxes.
Taxes: In most cases you only need to keep your tax returns for 7 years – the amount of time the IRS has to audit you. Some advisors suggest keeping the statements indefinitely while shredding the supporting documents after 7 years. And some advise keeping your W-2s until you draw social security in case there’s a discrepancy.
The paperwork you should never throw away include any certificates or government issued paperwork concerning birth, marriage, divorce, military discharges, and death. You should also have a copy of your wills and power-of-attorney documents in a safe place, as well as a copy with your executor.
Information from this article was taken from various sources including Real Simple magazine, MSN Money, and LifeOrganizers.com
(c) 2016 Leighann Marquiss
Comments (3)
Thank you for posting these helpful ideas!
I have 8 huge storage tubs full of mail, and important papers etc.., I will be calling the 1-800 shred people next month so they can come and shred all of it. I love it since you watch them shred it in the truck and the total amount of time it takes is less then 10 minutes, you also get a cert of shred. Its COOL! I ususall do this every 2 years and it saves me so much time.
I hardly ever keep catalogs unless I think the kids may need nice glossy, color photos for craft projects. With online catalogs, it saves a lot of space. 🙂