The Organized Life archives

Which Papers Do I Need to Keep – And For How Long?

Dear Subscriber,

One of the most urgent questions I have to answer in my work is, “How long must I keep this piece of paper?”.  Bills, receipts, taxes….sometimes it seems like it’s easier just to keep everything (or to throw everything out!); but maybe that's not the ideal solution! 

In fact there is a way to get control of your papers, because there are rules about how long you really need to keep each type that crosses your threshold.  I’ve put together the following timeline after consulting with various paper-trail authorities and tax experts.  It’s guaranteed to help reduce your paper clutter. 

Paper-Reduction Timeline

• Phone and utility bills.  Once they’re paid, they’re history.  If for any reason you need to check on an old bill, it can generally be located through the utility company’s web site (password-protected, of course).

• Canceled checks, other than those you are saving with your tax records.
• Credit card statements.  Once you’ve reviewed the monthly statement you may shred it when the next bill arrives.  Keep statements that show tax-related expenses with your tax records.
• Store receipts, in case you need to return things on warranty.

• This is the minimum amount of time that basic tax returns should be retained, plus related receipts.  So if you itemize, that would include the relevant credit card and store receipts, charitable donations, etc..  See below for more information.

• As a rule, this is the safest length of time to save your tax return and related materials (see below for more on this).
• Bank Statements and cancelled checks
• Medical Receipts and insurance payments for dentists, doctors, hospitals and prescriptions.
• Tax returns involving property (see below).  Retain original copies of the return as well as supporting documents such as receipts.

How long to keep tax records is a perennial question, to which the answer is that you must use your own judgment along with following federal and state statutes.

In general, federal income tax returns can be audited for up to 3 years after filing, up to 6 years if criminal fraud is suspected, and permanently if civil fraud is suspected.  If a tax return is not filed, these statutes of limitations do not begin to run.

In addition, the type of return you submit dictates how long you ought to keep it.  For a basic return, keeping it for three years is probably enough.  The situation is more complicated for returns with business or rental  property with depreciation involved.  If the IRS disallows depreciation they can go back to the beginning; for rental property that could be twenty to thirty years.  So if you have a business or rent property, you should keep the returns for as long as possible (at least seven to 10 years).

Home-related documents

• Real-estate records & transactions
• Property tax paperwork
• Warranties
• Title and deed to your house
• Home improvements receipts and cancelled checks 

Investment-related documents

• Investment buy & sell confirmations
• Dividend reinvestment records
• Year-end brokerage statements
• Mutual fund annual statements
• Investment property purchase documents

Loans

• Retirement plan annual reports
• IRA annual reports
• Birth & marriage certificates
• Divorce decrees
• Passports
• Wills
• Estate planning documents
• Medical/health records

What about catalogs?, you might ask.  Well, as a former direct response (“junk mail”) marketer, I can let you in on a little secret: most cataloguers will mail you a second, identical catalog about two weeks after each mailing, changing only the cover.  And as long as you order from pretty much any catalog, you will continue to receive them.  So unless you’re really ready to buy, feel free to throw them out as soon as you get them.  Because it is a certainty – almost as certain as taxes! – that you’ll soon be receiving another one.

I hope this timeline gives you the confidence to sort through your papers, organize the ones you keep, and confidently dispose of the rest.  Please let me know how it goes.

Until next month, Happy Organizing!

Sincerely,

Ann Bingley Gallops
The Organized Life

P.S.  For something completely different, check out the current issue of New York magazine (page 55 in the printed version) for my contribution to a story on kitchen organizing.  I'm not sure where they got my advice on keeping only 6 coffee mugs, though!! I advocate, as always, keeping the ones you really love and use, with a limit of about 20, perhaps.

ORGANIZING DISCOVERY OF THE MONTH

If you, like me, have a lot of activities on your plate, you’ll need a way to organize and easily retrieve tickets, passes, and the like.  Create a “home” for these things on your bulletin board by tacking up an envelope (#10 or smaller) with the flap open, and putting the tickets and other materials inside, in date order.  Even better, place the envelope right next to the calendar that’s already hanging there (right?). 

You’ll significantly increase the chances of finding the tickets for your next event, and reduce the time it takes you to find them.

Contacting me

I’d love to hear from you.  Please drop me a line with comments, questions, or suggestions for future newsletters.

The Organized Life
Ann Bingley Gallops
ann@theorganizedlife.net
www.theorganizedlife.net
646-382-3878

copyright 2006, Ann Bingley Gallops