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Organize Your Financial Paperwork

Brought to you by: Beacon
Share current LOB: PersonalBanking

It's tax season again—and you've probably got a nice pile of papers to prove it. Take a minute to organize the stack now and save yourself some time and stress later.

"Staying organized and keeping everything easily accessible will help prepare you for tax time this year and in the future," says Gail Cunningham, spokesperson for the National Foundation for Credit Counseling.

First things first: Keep all documents in one place so you can find them easily, Cunningham recommends. Also shred materials you don't need so that you’re not overwhelmed by the sheer volume of paperwork.

Here's Cunningham's best advice for turning the paper mountain into a manageable molehill of must-have documents. 

Save forever

Cunningham says to keep certain paperwork indefinitely:

  • Year-end financial statements
  • Stock and bond records
  • Documents dealing with inheritance and wills
  • Bankruptcy records
  • Retirement and pension documents
  • Insurance records, policies and claims
  • Contracts, mortgages and leases (as long as they're in effect)

Ditch after seven years

The IRS requires you to be able to produce records on income, deductions and credits you've claimed for three years after the date of a tax return—six if you fail to report more than 25 percent of your gross income. "To be safe, anything that has to do with the IRS should be kept for seven years," Cunningham says. 

These records include:

  • W-2s
  • 1099s
  • Bank statements showing earned interest
  • Investment records
  • Proof of payments for any deductions or credits you've claimed

If your records are electronic, download them to a dedicated folder, and be sure to back it up regularly.

Shred the rest

You can toss anything else outside of those categories. But beware of identity theft, Cunningham cautions: Shred documents that include your Social Security number, account numbers or other sensitive information. Cunningham recommends a crosscut shredder to turn the documents into confetti—which is much harder for a would-be identity thief to piece together.

To be on the safe side, also consider shredding documents that are from financial institutions; that pertain to bills, checks or credit cards; or contain your signature.

Knowing you have the documentation you need and that you've safely disposed of the rest will help you feel in control—not just of your files, but also of your overall financial life.

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

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