Are you feeling overwhelmed with the stacks and stacks of documents, papers, and paystubs that you are accumulating in your home? Do you want to understand better which financial documents you should keep or not?
There is an easy way to delineate between throwaway vs. important paperwork. Read on to understand this difference and make your home feel less cluttered.
Keep These Documents for 7 Years
Any document that’s related to your tax returns, which includes, W-2 forms or 1099 forms, receipts, and payments, must be kept for at least 7 years. You might ask, why?
Well, the IRS statute of limitations for auditing is 3 years.
BUT, they can go as far back as 7 years, if you underreported your income by 25% or more. The easiest way to avoid any issues with the IRS is to hold on to your tax returns and related documents for 7 years minimum.
Keep These Documents for 1 Year
Any documents that are not related to taxes, such as pay stubs, bank and credit card statements, medical bills, investment statements, and receipts for large purchases, should be kept for at least 1 year.
The great thing about modern banks is that they usually keep credit cards, investments, and bank statements for a year and you can access them easily through your online accounts. That makes your life easier!
But if you wish to access your old pay stubs, how would you do that? Well, have you tried this paystub generator?
It can help you reduce the number of financial documents in your home, as you won’t be saving paychecks any longer.
Throw Away These Documents
Any monthly bills can get tossed away after you pay them. They don’t need to be stored in your massive pile of important paperwork.
Also, most receipts can be thrown out as well, unless it relates to your tax return or insurance claims. Don’t forget to keep your product warranties as well, at least for a year, or however long your warranty lasts.
Keep These Documents Forever
As you can imagine, there are some documents you need to keep forever, or at least as long as you live. Some of these are:
· Birth certificates
· Marriage certificates
· Adoption papers
· Social Security cards
· Death certificates
· Power of attorney
· Military records
· Inheritance forms
· Wills or Living Wills
· Retirement and Pension plans
These documents might actually even require you to be extra diligent with their storage. They are hard to replace and you should store them with care in a safety deposit box that’s protected from fires and theft.
Important Financial Documents Need Extra Attention and Care
Even though we might live in the digital age, some financial documents need to be stored in their paper format. As long as you follow the tips laid out above, you should have smooth sailing with regards to important paperwork
Enjoyed this article? Don’t forget to check out the other financial articles on our website.