There is almost no better time to clean up your financial files than at tax time. You are already pulling tons of information together for yourself or your accountant. Before you file it all back… take a few minutes to look at what you got.
Saving is better than throwing away when it comes to bills, receipts and statements. Until you have accumulated so many that, you no longer can find what you need. Then it is time to stop and re-evaluate.
Your tax forms are the most critical documents to keep track of. The IRS recommends you keep the past three years in case of an audit. However, I recommend you hold on to tax forms for at least ten years. If you ever need to prove residency, income, etc… there is nothing more official than your tax documents. In addition, part of this packet should include your W-2s and other income statements. Just put the whole year together, staple and file.
Investment documents are another one to hold onto. If they are not tax-free investments, you will need them to verify your costs vs. sales. You should even hold on to these for three years after you sell them for the same IRS concerns. Your retirement account statements are less critical, but still important to watch their trends over time.
Receipts and warranty information is another key file to keep for as long as you own the product. Even if the receipt expires after 90 days or the warranty is only good for three years, still hold onto them. There is always a chance they can still be used in certain situations.
The rest of your paperwork only needs to be saved for about a year. There are occasions when you have paid a bill and have to prove it with paperwork. It can also be useful to easily find account numbers and contact information.
When are ready to toss though… don’t forget to pull out that shredder! Don’t let your clean up plans be ruined by an identity thief.