It happens every year at my house as the April 15 tax-filing deadline nears. Once my IRS forms are filed, I take the folder with all the supporting receipts, invoices and forms to our home office filing cabinet to store.
Inside this drawer are numerous hanging file folders containing insurance policies, investment documents, automobile titles, loan papers and other documents. Stuffing the new file into what little remaining space there is, I ask myself, "Do I really need all this stuff?" and then, "Should some of this be more securely stored?"
Being as long-in-the-tooth as I am, it's getting to the point where there's no more room in that file drawer, so I decided to answer these questions for myself.
I recommend the government website http://publications.usa.gov/epublications/keeprecords. It is full of common sense advice on what to keep and what to throw away.
For me, the big eye-opener was learning what to keep in a fireproof, waterproof safe or safe deposit box.
So, when you go into your filing system to put your tax documents away this year, perhaps these recommendations will get you started.
Documents to be securely filed indefinitely, according to this website, include items difficult or impossible to replace in case of loss or water or fire damage. This would include birth certificates, adoption papers, death certificates, marriage certificates, divorce papers, citizenship records and service papers. If you need access to the information more often than you want to visit your safe deposit box at the bank, you can keep photocopies of these documents at home. If you've lost any of them, information on the website can direct you in obtaining new documents.
Also in a safe deposit box, place a copy of your will, but also keep a more-accessible copy at home, as access to the safe deposit box may be delayed upon an owner's death.
Investment certificates and government bonds should go there, too, to protect against loss or theft, as should proof-of-ownership items such as deeds, mortgage papers, contracts, auto titles, leases and bank loan documents. Some of these documents can be replaced if destroyed, but storing them safely will save you the hassle and delay.
An inventory list of the contents of your residence should be kept here, too.
Items that do not need to be stored in a safe deposit box include income tax returns, education and employment records, bank books, Social Security cards and burial instructions.
Most people know they should keep tax records for seven years in case the IRS wants to audit your records.
What else should we be saving at home? In addition to current items like bills and receipts, bank statements and items needed for next year's income taxes, here's a list to start with:
· A copy of the list of your home's contents, to be used in case of fire or burglary, and to determine insurance needs
· Employment records, resumes, education transcripts and diplomas
· Family health records and health benefit information
· Credit card statements (up to six years) and information
· Insurance policies
· Social Security information on benefits and regulations
· Safe deposit box inventory, key and the bank name where the box is located
· A record book of bank account numbers, insurance policies, Social Security numbers and a list of where important papers are stored, all of which will be helpful to assist others in understanding your filing system
Here are some items the website says you can safely discard: salary statements, after confirming your W-2 forms are accurate, canceled checks for nondeductible expenses and expired warranties. Check with your accountant or investment professional to make sure of your decisions about keeping or discarding documents if you are in doubt.
What about those old insurance policies?
According to former Pennsylvania Insurance Commissioner Herb Denenberg, policies that include liability coverage are best saved for many years, in case, for example, a claim is made against them long after an accident has occurred.
"The most cautious would save liability insurance policies for 21 years or even longer," he writes in a pamphlet distributed by the office of state Rep. Julie Harhart, R-183rd, titled "Deciding Which Records to Save."
Denenberg also recommends saving receipts for expensive items and home improvements as long as you own the items and the home.
Once I take some of these papers to the safe deposit box and weed out the unnecessary ones, I'll have a long session with my paper shredder and then will be confident everything is where it should be.
It looks like my file cabinet drawer will have more room in it for this year's tax folder after all.