Organizing in the New Year
It’s a New Year. A time of renewal, a chance for a fresh start, a time to get organized. If getting more organized this year is one of your New Year’s resolutions, consider organizing your record keeping as well as your closets.
If you’re like me, you’re overrun with paper. Bills, receipts, tax records, bank statements, and pay stubs add up quickly to form a mound of paper by month’s end. Where and how do you store it? What do you need to keep and for how long? Below I’ll give you some tips about what to keep and for how long, ideas for storing documents, and how to reduce or eliminate most of that pesky paper altogether.
TAX RECORDS
According to IRS.gov, you should keep a copy of your income tax records for at least 3 years along with the supporting documentation. For example, if you file a normal return, keep any W2’s and 1099 forms and any other forms that you used to file your tax such as interest reporting forms or student loan documentation.
If, however, you have filed a tax claim for a loss from worthless securities, or bad debt reduction, or if you have failed to report all your income, you will need to keep your records for 7 years.
If you do not file a return or file a fraudulent return, you must keep the records indefinitely.
UTILITY BILLS
Utility bills should be kept for at least 1 month until you see that the payment has been applied from the previous month and you have reconciled it with your bank statement.
If you are self-employed or claim office space in your home, you will also need to keep records of your utility bills for the same 3-7 years that you keep your tax records.
BANK STATEMENTS AND DEPOSIT TICKETS
Bank statements should be kept for at least 12 months and reconciled monthly with your income, receipts, deposit tickets, and payments.
Deposit tickets should be kept until you reconcile the deposit with your bank statement.
CREDIT CARDS
Credit card bills and receipts should be kept until reconciled with the payment. For revolving credit with special financing offers, it is a good idea to keep the credit card statements until the revolving amount is paid off.
HOW DO I STORE PAPER RECORDS?
I found the easiest way that works for me is to place each year’s tax forms together in a 3-hole punched plastic file sleeve and place it in a 3-ring binder labeled Taxes. I keep 3 years-worth of taxes in the binder, discarding the oldest sleeve when the newest year is placed.
I do the same for bank statements, credit card statements and utility bills. Placing them in their own 3-ring binders.
I also keep insurance records and receipts for things like ongoing subscriptions, pet information, and other household information in their own plastic sleeves and in a 3-ring binder divided for that purpose. Stored on my bookshelf, each binder only takes up a few inches of space. At the end of the year, I purge the binders in which I have stored information that no longer needs to be kept and shred those documents containing sensitive information with a crosscut shredder.
REDUCING PAPER RECORDS
It is easy to reduce or eliminate the amount of paper that comes into your home and that you must store. At the New Foundation Savings Bank website, you can quickly sign up for e-statements and e-bills. You can pay all your bills in one place and have a digital record of the transaction. You can also download your monthly e-statements and copies of the digital bills and payment records to your personal computer. To be sure that I can always find the right document, I created special file folders on my hard drive and in the cloud into which I upload the saved records.
It is best to save a second copy of all records in an online cloud in case of a natural or other disaster such as fire, tornado, or a damaged computer. That way you’ll always have a record of your documents and can retrieve them from any device. You can also store your tax returns in the cloud if you file online or scan them to a pdf that can be stored.
I hope you make corralling that pesky paper part of your New Year’s Resolutions. I know it has been a stress-reducing, life changing decision for me, and we can all use a little less stress this year!
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