Spring cleaning financial papers

April 30, 2006 -- Spring is here and a lot of us would like to do some spring-cleaning of our personal finance papers--especially after filing taxes. But you may not know what to keep and what to toss. Susan Wilson Solovic offers some help.

Are there some documents we should never toss?

Yes. There are some papers that you not only need to hang onto forever, but should be stored in a fireproof box in your home or in a safe deposit box at the bank. If you choose a safe deposit box, it is a good idea to make an inventory of the contents and place the inventory in a permanent file at home. Some of the documents you should keep forever are:

 Your Will- Have a back up copy filed with your attorney

 Birth & Death Certificates

 Marriage Licenses, Pre-nups, Alimony and Child-Custody Agreements or Divorce Decrees

 Adoption papers and Military Records

 Passports & Citizenship Papers

 Your Health Care Power of Attorney & Living Will

 Copies of your IRA, 401(k), and other retirement accounts-keep your plan beneficiary names and addresses current

 All current insurance policies- home, health, disability and auto

 Deeds, property titles, mortgages, stock and bond certificates

 Employment Contracts

What kinds of things should we keep in our regular home files?

It is recommended you keep your state and federal income tax returns for at least 3 years and some accountants recommend seven years to be on the safe side. You will also need to hang onto all your receipts and supporting documents for deductions. Usually tax returns will be audited within three years, but an audit may be held six years after the return is filed under some instances. If you have the room it is a good idea to keep these financial papers also:

 Cancelled checks or bank statements

 Monthly statements from investments and retirement accounts

 Guarantees and warranties-write down the date and place of purchase and keep records on all repairs

 Keep documents showing dates and costs of improvements to your home-these records can help with insurance companies in case of a dispute over damage

 Insurance documents-health, auto, and home claims and adjustments

 Medical Bills-It is a good idea to hang onto these for a year in case you have a dispute over a payment or are billed twice. After a year it is safe to shred them if you don't need them for tax purposes.

 

DON'T SAVE

 

 ATM Receipts & Bank Deposit Slips-As soon as they appear on your bank statement-shred these! An identity thief might be able to get enough information off them to raid your account.

 Pay Stubs-Hold on to pay stubs to match to the year-end statement. Then you may shred the stubs. Keep the year end stubs for three years.

 Utility Bills-You may shred this bills as soon as you pay them

 Credit Card Statements-Only hang onto statements if they list tax-deductible purchases or charitable gifts. If not, shred them after you pay.

 Investment Papers-Hold onto papers that confirm the selling or buying of stocks and bonds only until you receive the quarterly statement and check the information. Shred the quarterly statements once you receive the year-end document.

 

After tax season is a great time to do some tweaking of your personal record-keeping system-since you are familiar with what you needed to complete your return. Even the best system won't fill your needs forever. Changes in employment or your lifestyle require some adjustments in your record-keeping tasks. For more tips on organizing your home office check out www.sbtv.com

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