![]() ![]() Consider your strategy for collecting Social Security. Wills, trusts, powers of attorney, living wills and letters of instruction should be periodically updated in accordance with the current law and your wishes. Beneficiary arrangements are just one piece to an effective estate plan. Hardware stores charge between $30 and $60 depending on the box size.2. Hard-to-replace documents such as wills or trusts and a backup disk of any financial information that's on a computer should be stored in a fireproof box. They cost $8-10 and can be purchased at any office supply store. Store these boxes away from the furnace, sump pump or a basement that floods. Ray recommends using a multi-file box - a plastic box with built-in, expandable files inside - for each year's worth of paperwork. Holding onto your financial records does no good if you can't locate them when necessary. Investment confirmation: Keep all documents that confirm purchase and transfers of stock, bonds, etc. Also hold onto the settlement statement and any receipts for improvements to the home or property. You'll need to refer to your note to make sure any interest rate adjustments are made correctly and to check out any pre-payment penalty. Home-related documents: As Ray says, a mortgage note is the operating manual for your home. Other financial account statements: such as mutual funds or mortgage statements.Īppliance receipts: Staple receipts for dishwashers, DVD players, etc.Monthly investment statements: 401K is the most common example.Bank statements: Keep those statements that include a tax-deductible expense.Remember to carefully tear up any papers that include your account or card number before tossing in the garbage.Īll of these items can be reconciled with a year-end statement and then trashed. An exception - keep any statement that shows a gift you made to charity. Credit card statements: Again, you can throw these away after checking for accuracy and paying the bill.Utility, phone, cable bills: Toss these once you've checked for accuracy and paid the bill.ATM receipts/deposit slips: These can go as soon as you record the transaction in your checkbook and see it appear accurately on a bank statement.Here are Ray's tips on all that other stuff. The bust of the Internet bubble also left taxpayers with worthless stock.įinancial paperwork certainly isn't limited to taxes. ![]() Anyone who held Enron stock, for example, had the option to claim those losses this year. If you claim worthless securities - stocks that no longer hold any value - as a loss on your return, hold onto the paperwork for seven years. Seven years: Unfortunately, this seven-year rule is finally applying to a larger portion of the public. To avoid problems, Ray suggests keeping returns for any year that includes a large transaction (sale of property) or irregular income (trust income, stock option exercises). Then when you sell it and report the gain, you may underreport that amount. For instance, if you receive stock from a grandparent, you may not know how much it originally cost. Six years: If there is a possibility that you may have underreported income by as much as 25 percent, you need to keep your returns for six years. For most taxpayers, it's now safe to throw away those 1998 returns. If you are audited, the IRS can ask for any of this paperwork. Three years: Everyone needs to keep federal and state income tax returns along with any supporting receipts or statements for three years. Most of the questions Ray receives about trashing or stashing financial paperwork center on tax returns. People tend to hold onto more of these items than they need, and soon drowning in piles of paperwork becomes a real possibility. Here's a scary fact: a typical family with a home, two jobs and kids will generate more than 1,000 financial statements and receipts each year. Early Show Financial Adviser Ray Martin tells us what to toss, what to keep, and how to keep it all safe and organized. Now that we've passed the tax deadline, it's the perfect time for a little financial spring cleaning. ![]()
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