What to Keep and What to Throw Away

What to Keep and What to Throw Away

This weekend I went though my files including old bills, tax returns, and insurance documents. After feeling lost in all the paperwork, I made a list of all the things I needed to keep so I could easily sort through the papers. Here’s a summary of what to keep if you also find yourself filing this weekend:

Insurance documents:

Auto, home, umbrella policies: File the most recent policies so you can reference them easily. You’ll usually receive an updated copy once a year. Go ahead and shred the older copies once the new policy arrives.

Life insurance, disability insurance, and long term care insurance policies: Keep these documents for the duration of policy.

Investment Statements (Retirement, brokerage, and mutual fund accounts): 

Keep the most recent monthly or quarterly statements and then shred the older ones. Keep each annual statement until you’ve closed the account. If you receive electronic documents, set up a folder on your computer to store.

In particular, keep a record of the cost basis of any stock or fund that you buy. Also keep a record of how much you’ve contributed to an IRA and any amounts you contributed after taxes.

Home Improvement Receipts:

Keep your home improvement receipts until you sell your home. This is an area that many people forget. If your home has appreciated over the years you may be over the exclusion amount for capital gains ($250,000 for single tax filers and $500,000 for married couples) and will have to pay more taxes. Many of the home improvements will count against these gains and can reduce your tax bill but you’ll need the receipts to prove it.

Pay Stubs:

Keep a copy of your pay stubs until the end of the year to reconcile with your W-2’s and then shred and throw away. Or many companies now have online access too. Pay stubs are also helpful to how much you’ve contributed to your 401K, flexible spending accounts, and health savings account.

Loan Documents:

Keep documents for homes, cars, student and other loans until you’ve paid off the loan.

Taxes:

Keep for at least 7 years. I keep the last three years in my filing cabinet and then put the later ones in storage.

Utility, Credit Card and Other Monthly Bills: 

Once you know the bill is correct and paid for, go ahead and toss. (It’s even easier if you set up automatic payments and electronic statements though the company’s website.) If you have a home office for your business, keep track of the bills you’ll need for tax time.

Medical Bills:

Unless you plan on deducting your medical expenses, you can toss the bills once your insurance company has paid the bill and resolved any issues. (You may be able to deduct medical expenses that are more than 10% of your adjusted gross income.)

And finally, here’s what to keep long-term:

  • Birth and death certificates
  • Social security cards
  • Pension plan documents
  • ID cards and passports
  • Marriage license
  • Business license
  • Wills, living wills, and powers of attorney
  • Vehicle titles and loan documents
  • House deeds and mortgage documents
  • Divorce Agreements
  • Life Insurance Policies

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The content on this post is for information purposes only and is not intended to provide individual tax or financial advice. Readers are advised to consult financial or tax professionals for specific information regarding your individual situation. Opinions expressed herein are solely those of Balance Financial Planning, LLC, unless otherwise specifically cited. The content is developed from sources believed to be providing accurate information.

Balance Financial Planning, LLC

5438 Shafter Avenue

Oakland, CA 94618

cheryl@balancefp.com

510.847.7432