Tips for Managing Tax Records and Other Important Documents

By Elsie Dudukovich2 Comments

The Financial Industry Regulatory Authority (FINRA) stresses to consumers the importance of developing a reliable method of organizing, retaining, and securely disposing of documents.  While many people agree with this idea, one of the common roadblocks is knowing what documents to keep and for how long.  
The Consumerist  and Consumer Reports offer some ideas to consider as you develop an approach that works best for you.  Their ideas could also be applied to the documents associated with your IRA assets, such as home improvement records for investment properties or payment records on promissory notes.

Keep for a year or less:
  • Paid monthly utility/cable/phone bills
  • Credit card and bank statements after verifying and reconciling the transactions
  • Paid medical bills
  • Pay stubs after reconciling the information on your yearly income tax reporting form such as a W-2.
Keep for longer:
  • Tax returns: Keep your returns and associated supporting documents for at least seven years. Home-related documents: Retain purchase documents, home improvement records, permits and inspection documents for as long as you own the home.
  • Insurance policies: Retain policies for home/renters insurance, car insurance and umbrella insurance for the year, replacing and discarding the prior copy whenever the policy renews. Life, disability or long-term care policies should be kept as long as they’re in force.
Lifelong documents:
Invest in a firebox or a safety-deposit box for:
  • Birth certificates
  • Adoption records
  • Death certificates
  • Marriage and divorce papers
  • Military records
  • Wills, powers of attorney and health care proxies
  • Social Security cards
  • Passports
  • Appraisals for jewelry, art or other valuable property for as long as you own these items
Remember to discard physical documents in a secure manner, such as using a shredder instead of throwing the items fully intact into a trash bin. If you use digital storage, make sure you store these in a safe, secure and accessible place as well.