Now that we are nearing the end of January and all of your w-2's, 1099's, 1098's, etc will be coming in, it's time to think about your paperwork and filing.
As you start to receive things you will need for your taxes, create a folder or envelope with the year on it and place everything in there. You will have everything at your fingertips when it's time to file your taxes or visit your accountant.
If you run a business or own rental properties, there is a lot of paperwork you will need to file your schedule C's and E's. The paperwork, receipts that help you with these schedules, should be kept throughout the year and just need to be finalized before you file your taxes.
You will also begin to receive your end of the year statements for any investments, insurance policies, stocks and bonds, bank statements, etc. I like to keep my final statement for the year and then I get rid of the previous statements. I take all of my end of the year statements and place them in an envelope and file them with my supporting tax documents with the year on it.
What paperwork should you keep and for how long?
This question is answered on a person by person basis. Generally speaking anything that is directly related to the filing of your taxes needs to be retained for 7 years. The IRS can decide to audit you for up to 3 years and once they audit they can look back 7 years. You should keep the actual tax returns for at least 10 years.
You don't need to keep your bank statements unless you use them as receipts for your taxes.
You don't need to keep all of your pay check stubs as long as your W-2 matches your last paycheck.
This is the time of year I like to go through all of my files and clean them out.
When I get renewal for my auto, homeowners, fire insurance, I get rid of the old policy and replace it with the new.
I like to go through all of the instruction books I have and get rid of the ones that go to items I don't have anymore.
This is also the time that I empty the big envelope I have been accumulating things in all year and put everything into a magnetic page photo album.
My big envelope is where I put everything I would like to keep throughout the year. I put the little things in it. The pictures that have been drawn for me or the cards that I just can't get rid of. I also put the pictures that come in my friends and families cards especially the holiday ones.
At the end of the year, I go back through the envelope and put everything into a photo album and start a new envelope for next year.
Well I hope this helps get the paperwork in order!
Recapture Your Space
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