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Financial Education for Everyone

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April 18, 2008

Have you ever wasted precious weekend hours searching for tax-related documents? If the television died, could you locate the warranty to see if it's still covered? Ever forgotten an online account password? These are all good arguments for setting up a proper filing system.

Consider this: A recent survey uncovered that nearly a quarter of adults have incurred late-payment fees because they couldn't find billing statements. So poor paperwork management is not only time-consuming, it's expensive.

Here are a few helpful document filing categories:

Tax-related documents. These include receipts for deductible items, income and investment statements, and mortgage and home improvement expense receipts. The IRS has up to six years to audit you (there's no time limit if they suspect fraud), so keep all tax returns and related receipts and statements at least that long. IRS Publication 552 recommends what to save and for how long (www.irs.gov).

Checking and savings accounts. Enter ATM and debit card deposits, withdrawals and purchases into your check register right away to keep a running balance. Check all entries against your monthly statements for accuracy. Save cancelled checks for deductible expenses with tax returns. Banking online is an easy way to keep your recordkeeping current.

Utility, phone, cable and credit card accounts. Review bills for any errors or mischarges. Once payments have cleared, you can shred the bills unless you need a record for tax purposes (like home-office tax deductions).

Pay stubs. Save until your year-end W-2 form arrives. When your annual Social Security income statement arrives, double-check annual income amounts. If you spot an error, call 1-800-772-1213.

Investment and retirement funds. Keep monthly and quarterly statements until you receive year-end statements. Always save records of any after-tax contributions to retirement funds to prove you've already paid the taxes.

Housing. Retain paperwork on your mortgage, refinancing, lease or rental agreement. Also save home improvement receipts for possible tax advantages when you sell.

Major purchases. Save original sales receipts for appliances, electronics and other major purchases and attach to product warranties and owner's manuals. When purchasing items online, save sales receipts and shipping confirmations until the items have arrived and cleared your credit card statement.

Insurance policies. Maintain files for homeowner/renter, car, life, disability and medical insurance policies. Indicate on medical bills how and when you paid in case of billing disputes; also, save for six years if you deduct medical expenses from your income taxes.

Wills and trusts. Keep copies of your will and living trust and contact information for attorneys who helped prepare them. Important: Don't put your only copies in a safe deposit box, since it will likely be sealed should you should die unexpectedly.

Passwords. Create a list of all online accounts and passwords and store in a secure location.

A few additional tips:

  • Store critical documents such as your will, trusts, birth/marriage certificates, insurance policies, old tax returns and passport in a fireproof, lockable storage box. Also, keep additional copies in a safe deposit box or with a trusted acquaintance in case of major home damage.
  • Periodically back up information in computer files on CDs or an external hard drive.
  • Always shred mail or documents containing personal information rather than simply throwing away.
  • Consult a financial professional about your particular situation. If you don't know one, www.plannersearch.org is a good place to start looking.

Filing is a drag, but so is tearing the house apart looking for documents.


This article is intended to provide general information and should not be considered health, legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.