Dear friends,
Kudos to everyone who decluttered paper over the weekend, like Yolanda S. who tidied up the Hot Spot. “Our family has a bad habit of placing everything on the kitchen table,” she writes. “When dinnertime comes, the pile moves to the counter.” I’ve been there, haven’t you? I’ve also been known to hurriedly put everything from the Hot Spot in a bag and stick in the closet when friends were coming over!
While technology is creating more and more paperless options, there are a few documents that we do need to keep. Everyone’s situation is different, but here are some guidelines:
Tax Returns
Your accountant is the best person to talk to about what, exactly, you need to store. I keep the last 7 years of personal and business tax returns and all the related records. They are stored in waterproof clear plastic containers. Each year when taxes are done, I move one year out, shred the documents, and move the new year in. I keep federal tax returns indefinitely.
Important Life Documents
Birth and death certificates, wills, living wills, marriage licenses, passports, etc. should all be stored in a fireproof safe. It’s a good idea to make good photocopies of these documents and give them to a trusted friend or relative who lives elsewhere.
End of Life Papers
Make it easy for our survivors to deal with things by filing paper copies of life insurance policies, wills and estate plans, beneficiary directives, burial instructions, access to lockboxes, etc. Keep these papers in a file cabinet and give your loved ones clear instructions about where they are.
Home and Auto Papers
Keep deeds, mortgage documents, titles and bills of sale, home improvement documentation and warranties in a fireproof safe.
Keep Up the Good Work
If you do 20 minutes of paper decluttering today, I’d love to hear from you! Share your comments on the this post or over at the Facebook Money Diet Community Group.
You’ll hear from me again tomorrow with a tip to help you drastically reduce those paper stacks.
Best always,
About Eliza Cross
Eliza Cross is the author of 16 books, including Small Bites, 101 Things To Do With Bacon, and BERRIES. She enjoys sharing ideas to simplify cooking, gardening, and home projects. She is also the owner of Cross Media, Inc. and founder of the BENSA Bacon Lovers Society.
I am confused. You said to keep 7 years of tax returns. Then at the end of that section, you said you keep federal tax returns indefinitely. Help, I have 30 years of returns right now and so desperately want to shred!
So sorry, Karen — you’re right. That WAS confusing! Here’s a more complete answer: I shred my state tax returns after 7 years, along with all the supporting receipts, bank statements and records for that year because I no longer need to produce documentation for an audit. But I hang on to the federal returns just in case. The reason is that there’s no statute of limitations if the IRS decides a person filed a fraudulent return. I have also referred back to my business tax returns a time or two for some historical data.
In your case, you might ask your tax preparer if you can ditch some of those files. You have been very diligent for 30 years! xo
Papers are a hard one for me, because I’ve always kept everything. It was a wise move in this one case. My husband and I were divorced through an Alabama lawyer after he left Canada. Afterwards, on my income tax I was able to claim one of my daughters as “equivalent to spouse”. After several years, I received a bill from Revenue Canada for over $8,000 stating that I had claimed ETS wrongfully, even though my employer had my deductible tax rate set up for me as a single person on my bi-weekly paychecks. They had no record of where my ex-husband was, and decided to try to get more money out of me. I found out that this is a common occurrence. Because I had saved every slip of paper, legal documents, correspondence, etc., when I went to my MP (federal Member of Parliament) to help straighten this out, it took just 2 quick hours from him to settle the matter with Revenue Canada!