Documents Guide: Keep It or Shred It?

Documents Guide: Keep It or Shred It?

If you’re like me, your mailbox is brimming every day with paper! Some of it is junk but some of it you need to hang onto. It can be hard to know what to keep and what to get rid of, but this video will help straighten it out.

Keep Forever

These documents need to be in a safe or a fire-proof box. A file folder won’t cut it.

  1. Legal Documents
  1. Insurance Documents including policy information
  1. Annuity Policies including the initial contract sent to you
  1. Real Estate Documents including initial investments in properties. Even after you get rid of the property, keep the paperwork! Then you can know your cost basis and manage your taxes appropriately.
  1. Home Improvement Receipts or Documents because if you sell your home, some of the money you put into it can raise your cost basis and reduce the taxes you might owe upon the sale of your house.
  1. Gift and Inheritance Assets need to be tracked too. Keep a record of the values, the date that you received them and/or the date of passing of the person you inherited from. You may never need this information, but if you do, it can be hard to track what happened in the past.

Keep for 6 Years

This category has IRS written all over it. You need to keep 6 full years of documents supporting your annual tax return filing so you have a paper trail if you ever get audited. Why 6 years? That’s how far back the IRS can audit you. Have tax-related documents older than 6 years? Shred them.

Keep for 1 Year

Each month or each quarter you’ll get statements for investment and other types of accounts. Accumulate those through the year. At the end of the year, look at your December 31st statement and make sure everything on it makes sense. If there’s a discrepancy, go back to those monthly or quarterly statements and figure it out. If there’s no discrepancy, shred what you’ve kept through the year but KEEP the year-end statement.

Online Statements

If you’ve gone paperless with some or all of your accounts, you aren’t off the hook. You need to create a system so you’re saving year-end statements for online accounts. This needs to be somewhere you can access, not the institution’s website. If you rely on going to the bank’s website, for example, sometimes back statements can be harder to access and take longer to get. If you have saved each .pdf you can get them as quickly as you need them. So save them to your computer, the cloud, or print them and put them in a safe. 

One Last Tip

Don’t just pitch it in the trash. You need to shred your paperwork. If you throw it in the trash, once it reaches the curb for the trash pickup it becomes public property. That can make you vulnerable to identity theft.

If you live in Montgomery County, click here to find a list of local paper shredding events.

 

This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Traci Richmond, CFP® and not necessarily those of RJFS or Raymond James. Raymond James does not provide tax or legal services. Please discuss tax or legal matters with the appropriate professionals. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.