I spent last weekend sorting through some piles in my home office…and setting up files in my file cabinet.
It got me thinking…some of my papers should probably be stored more securely than just as a pile on my desk. If anything should happen to my house replacing lost documents would be a huge time commitment to say the least…
So, I figured I’d share some important tips to save you time, money and hopefully a little frustration.
WHERE TO STORE DOCUMENTS:
Documents that are difficult to replace - things like birth certificates, marriage licenses, divorce decrees, records of military service, citizenship papers, adoption records, etc. - should be kept in a safe deposit box at a bank.
For your convenience - and some added protection - keep photocopies of these documents at home. If you keep paper copies - as opposed to scanning - you could be even more secure by keeping them in a home fire safe that carries a UL class 350 fire resistant rating.
Other documents for safe deposit box storage include passports, social security records, stock certificates, deeds, property titles, mortgages, wills and insurance documents. Remember to keep copies at home for your own convenience.
HOW LONG TO STORE DOCUMENTS:
CPAs say that the nature of the document determines how long it should be kept.
For example, utility, credit card, and other bills can be discarded once you have verified that they are correct. And there's no need to keep car titles or most other property documents once you've disposed of the item.
If your mutual fund company or brokerage house provides a year-end summary report of your transactions, there's no need to keep monthly or quarterly statements once you've checked that the year-end report is accurate. However, hold on to all your buy/sell trade confirmations, since they contain information needed for completing your tax return.
Retain indefinitely records documenting retirement plans and individual retirement accounts.
Tax records, such as federal and state income tax returns and supporting documentation should be kept at least six years. The reason being, if you've substantially under-reported income the IRS has six years to audit your returns.
It's a good idea to keep pay stubs until you get your W-2. Keep canceled checks for as long as you might need proof that payment was made. However, canceled checks and receipts that support income tax deductions should be held as long as the returns themselves.
KEEPING TRACK OF YOUR DOCUMENTS:
Finally, CPA's suggest that you keep a list of all items, where they are stored, and give a copy to a friend or relative who can locate the items in an emergency.
Of course my team and I hope you never have to recover from a tragedy, but if you do maybe these tips will make your life a little easier.