Cleaning Up Your Financial Records
Spring is upon us! The beautiful weather and budding treesare a sure sign of it. This is thetime of year many people undertake the annual "Spring Cleaning" of theirhomes. However, not all spring-cleaning requires a broom and dustpan. Take a look at the table below when organizing your financialdocuments. It should help youidentify what to keep and what to toss.
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What to Keep: |
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Insurance Policies |
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Policies and declaration pages |
Keep Current |
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Legal Documents |
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Wills, Powers of Attorney, Trusts |
Forever, if current |
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Marriage and Birth Certificates |
Forever |
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Titles to Real Estate and Vehicles |
Until sold |
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Military Records, Naturalization & Adoption Papers, etc. |
Forever |
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Tax Documents |
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Tax Returns and supporting documentation |
At least 7 years |
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(The IRS can initiate an audit within 3 years, pursue underreported income for up to 6 years, and investigate false or fraudulent returns indefinitely.) |
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Account Statements |
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Year-end Statements for Investment and Banking Accounts |
At least 1 year |
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(Keep indefinitely if related to taxes, business expenses, home improvements, or mortgage payments.) |
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Receipts or Bills for Large Purchases |
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Home improvement projects |
Until sold |
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Insurable Items |
As long as owned |
What to Toss:
Receipts
Aslong as you are not using them for tax deductions or expense reimbursements,toss them once you'veverified the charges.
Utility Bills
Aslong as they are accurate and they have been paid, toss them.
Monthly and Quarterly Account Statements
Ifquarterly statements reflect monthly transactions, get rid of monthlystatements. Similarly, if year-endstatements list all transactions for the year, toss quarterly statements.
Old Investment Prospectuses and Brochures
Toss prospectuses and brochures that areoutdated or for investments you have sold.