It's that time of year again, folks. Time to clean your office, dust off the pile of papers at the corner of your desk and get your stuff together to crank out those tax returns. What fun, right? Yup, about as fun as a bikini wax. Over the years, I've compiled a few go-to tips to help our family sort through the craziness that is household paperwork and I thought I'd share some of those with you today. While it's not the most riveting topic of the year, it's certainly some good advice, so enjoy!
1. Pile your paperwork up in a snazzy looking basket or bin.
As I get mail that I need to save or as other important paperwork trickles in, I throw out the clutter (ie. the ad that comes with my power bill, the extra envelope that comes with my TV/Internet bill since I pay online, that kind of thing) and simply keep the substance. Then it goes in the filing pile, in a basket on my office desk. And it's gotta be a cute basket, right? Something snazzy looking to disguise the clutter of the filing pile.
2. Attack your filing pile only once or twice a year.
I know, it might make more sense to some of you to keep up with your filing every month or even every couple of weeks, if you're super ambitious. I guess I'm just plain lazy because once a year works for me. Filing is not one of my favorite tasks, so it makes the most sense to me to sit down and knock it out in one big couple hour stint. Think paperwork, wine and Real Housewives. Knowing I only have to file once in a blue moon (usually at this time of year) makes things a lot easier for me!
3. Don't keep everything.
Let me say it again: don't keep everything. Otherwise known as no, Michelle, you don't need your power bill from your college apartment back in 2003. I have a tendency to want to hold onto all paperwork... you know, just in case. In case the power company comes back to me ten years later and wants to dispute my bill? Mhmm.
A couple of years ago, David and I decided we were holding on to far too much paperwork, so we educated ourselves about what we really need to keep and what we could trash. I found this great set of tips from the IRS that taught us a lot. We also reference the information below from Suze Orman.
Keep till warranty expires or can no longer return or exchange
- Sales receipts (unless needed for tax purposes and then keep for 3 years)
What to keep for one month
- ATM printouts (when you balance your checkbook each month throw out the ATM receipts)
What to keep for one year
- Paycheck stubs (you can get rid of once you have compared to your W2 and annual social security statement)
- Utility bills (you can throw out after one year, unless you're using these as a deduction like a home office --then you need to keep them for 3 years after you've filed that tax return)
- Cancelled checks (unless needed for tax purposes and then you need to keep for 3 years)
- Credit card receipts (unless needed for tax purposes and then you need to keep for 3 years)
- Bank statements (unless needed for tax purposes and then you need to keep for 3 years)
- Quarterly investment statements (hold on to until you get your annual statement)
What to keep for three years
- Income tax returns (please keep in mind that you can be audited by the IRS for no reason up to three years after you filed a tax return. If you omit 25% of your gross income that goes up to 6 years and if you don't file a tax return at all, there is no statute of limitations.)
- Medical bills and cancelled insurance policies
- Records of selling a house (documentation for Capital Gains Tax)
- Records of selling a stock (documentation for Capital Gains Tax)
- Receipts, cancelled checks and other documents that support income or a deduction on your tax return (keep 3 years from the date the return was filed or 2 years from the date the tax was paid -- which ever is later)
- Annual investment statement (hold onto 3 years after you sell your investment.)
What to keep for seven years
- Records of satisfied loans
What to hold while active
- Insurance documents
- Stock certificates
- Property records
- Stock records
- Records of pensions and retirement plans
- Property tax records disputed bills (keep the bill until the dispute is resolved)
- Home improvement records (hold for at least 3 years after the due date for the tax return that includes the income or loss on the asset when it's sold)
- Marriage licenses
- Birth certificates
- Adoption papers
- Death certificates
- Records of paid mortgages
The attorney in me tends to want to keep more of the contract-type legal documents, real property records and income tax documents forever, but overall I think this is pretty good information.
4. Keep your filed paperwork in a neatly labeled, organized fashion.
If only my filing cabinet were this cute! To tell you the truth, David and I have been on the lookout for a new filing cabinet for about a year now but are being super picky about this piece of furniture, for some reason. We just haven't found the right thing- I don't want to spend an arm and a leg on a filing cabinet, but I want it to be cute... is that so much to ask?! For now, we still have his college plastic filing cabinet with one of the plastic faces popped off. Holla at ya boy. BUT I will give us some credit, as the inside of it is very neatly labeled and organized with categories for all of our paperwork filing. It makes a world of difference! Maybe one day I will find the perfect filing cabinet... maybe that's a fun DIY project in the future, eh?
5. Store your valuable paperwork in a safe or safety deposit box.
It's important to keep your big daddy (ie. important) paperwork in a fireproof safe or a safety deposit box. Here's the breakdown Good Housekeeping suggests in terms of where to store what:
|Birth/death certificates||Tax returns|
|Social Security cards||Credit card statements|
|Emergency contact information (insurance agents, doctors, family)||Retirement savings statements|
|Marriage certificates/divorce decrees||Investment records|
|Copies of your driver's license, green card, and other identification cards||Paycheck stubs|
|Copies of lifesaving prescriptions (like insulin, asthma inhalers, etc.)||Bank statements|
|List of bank account and credit card account numbers||Warranty/rebate documentation|
|Inventory of household goods||Legal documents|