There are steps to getting your finances in order. It is important to rid yourself of the excess clutter, and keep the more significant papers in an organized fashion. Here is a list of documents that need to be kept, why they need to be kept, and when it is okay to discard them.
- Tax Returns (State and Federal)- the Internal Revenue Service (IRS) has the ability to audit tax returns anywhere from three to six years after they have been filed. That is generally for federal income tax returns. If any form of fraud is suspected than there is no statute of limitations on the returns. It is best to keep them along with any receipts.
- Investment documentation- There are three pertinent aspects that you need to know in regards to investments: how much you paid for them, how much you sold them for, and what type of yearly returns you collected while you had them. Generally the brokerage company that you are working with will send you a confirmation of the transactions. Keep all of them. Also keep any dividend statements for stock and mutual fund investments.
- Retirement records and paystubs- if you are making any contributions to an IRA or have begun a Roth IRA there are certain tax records that must be retained until you have withdrawn all funds from them. When it comes to paystubs, it is recommended to keep them until you receive the W-2 from the employer for that year.
- Insurance policies- there is many different forms of insurance that you will have, including homeowners, life, medical, auto, disability, and liability. Keep the original policies and the signed contract for the length of time that you keep the policy. If the contract is terminated, it is recommended to hang onto the documentation for at least two years.
- Trusts and estate planning documents- some individuals will utilize trusts and other forms of estate planning to save on estate taxes. Keep for as long as the accounts are active