Another tax season is upon us.  As we gather the necessary documents, we are suddenly surrounded by…paper!
 

As an organizer, one of the most common questions that I am asked is how long to keep various types of paperwork. It can be overwhelming to try and keep track of all the different guidelines for different types of documents, So, I have put together a comprehensive guide to help you stay organized and clutter-free. If you are still unsure, it is always best to consult with your accountant or tax preparer.

Disorganized paper

Too much paper

 

1.    Tax Returns:  Keep tax returns and all supporting documentation for at least 7 years.  Then IRS has up to three years to audit your return. So, it is best to keep everything for at least that long.  However, if you have underreported income by 25%, the IRS has up to six years to audit you.  Keeping your tax returns for seven years ensures that you are covered, in case of an audit.  Click here for additional information.

1.    Tax Returns:  Keep tax returns and all supporting documentation for at least 7 years.  Then IRS has up to three years to audit your return. So, it is best to keep everything for at least that long.  However, if you have underreported income by 25%, the IRS has up to six years to audit you.  Keeping your tax returns for seven years ensures that you are covered, in case of an audit.  Click here for additional information.

2.  Bank Statements:  It is generally safe to shred bank statements after one year, as most banks now offer electronic statements that you can access at any time.  However, if you need to keep them for tax purposes or for any reason, you can keep them for up to seven years.

 

3.   Pay Stubs: You can generally shred pay stubs once you have received your W-2 form for the year. The information on your pay stub should match your W-2. So, there is no need to keep both. However, if you need them for any reason, you can keep them for up to seven years.

 

 

4   Medical Records: Keep medical records indefinitely. It is important to keep track of your medical history in case that you need to reference it in the future. You can scan and digitize your medical records to save space and make them easier to access.

 

 

5.   Utility Bills: You can generally shred utility bills once you have paid them and verified that the payment has been processed. However, if you need them for tax purposes or for any other reason, you can keep them for up to seven years.

 

6.   Insurance Policies: Keep insurance policies for as long as they are in effect. Replace with new ones when you receive them. You may need to reference them in case of a claim or other issue.  So, it is important to keep them on hand.

 

7. Loan Documents:  Keep until the loam is paid off.

 

 8.  Certificates of birth, death, marriage, divorce, military discharge papers and social security cards should be kept forever.

 

Click here for further information on papers that are not mentioned above,

 

I also recommend developing a filing system for your paperwork.  An accordion file that can be easily accessed works great to keep the current year’s documents.  File documents and receipts as you receive them. You will be all set, when tax season comes around again.

Accordion file

Use accordion file to store current tax documents

Set up another system for older documents that you need to keep. Label each year’s tax information, so that you can shred it after the 7 years have passed. It is wise to keep important documents and certificates in a fireproof safe.

 

By following these guidelines, you can keep your paperwork organized and clutter-free.  Remember to regularly go through your documents and shred anything that you no longer need.

 

If you feel this is overwhelming and you are drowning in paperwork, give me a call.  I have helped many clients go through their papers and set up systems.  They feel nothing but relief when we are finished!