Keep or Toss: Getting your Finances Organized in 2014

As you scramble to go through receipts, bills, and pay stubs from the year for tax time, you might be asking yourself: What do I really need? How long must I keep those items? What is clutter and what is worth keeping? We have sourced several money managing periodicals (Money Magazine, Kiplinger’s), as well as advice from a well known “financial guru” (Suze Orman) to find out what you’ll need to de-clutter your filing cabinet and get your tax paper work in order!

Keep until warranty expires or you can no longer return or exchange

  • Sales Receipts (Unless needed for tax purposes and then keep for 3 years)

What to keep for 1 month

  • ATM Printouts (When you balance your checkbook each month throw out the ATM receipts)

What to keep for 1 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 – then you need to keep for 3 years)
  • ·         Credit Card Receipts (Unless needed for tax purposes – then you need to keep for 3 years)
  • ·         Bank Statements (Unless needed for tax purposes – then you need to keep for 3 years)
  • ·         Quarterly Investment Statements (Hold on to until you get your annual statement)

What to keep for 3 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 — whichever is later)
  • ·         Annual Investment Statement (Hold onto 3 years after you sell your investment.)

What to keep for 7 years

  • Records of Satisfied Loans

Keep Forever

  • ·         Marriage Licenses
  • ·         Birth Certificates
  • ·         Wills
  • ·         Adoption Papers
  • ·         Death Certificates
  • ·         Records of Paid Mortgages
  • ·         Life Insurance Policies

What to Toss

  • ·         Toss paid bills at your discretion (some people get a kick out of comparing old heating bills with their current one). But keep receipts for big purchases (computers, furniture, jewelry, and what not) indefinitely for warranty and insurance purposes.
  • ·         Purge bank statements every few years if you get paper copies from your bank. Most banks offer them online and you can find them there if you need them.
  • ·         With insurance policies that you renew each year, such as home, apartment, and automobile, keep the most current contracts and dispose of older ones.

While you are getting your finances organized, don’t forget to take another look at your life insurance policy. Is it up to date? Is it the right amount for you? Western Fraternal Life can help you get your financial future on track.

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