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We all understand it’s important to save personal documents, such as annual tax returns, safely and securely. What’s not always clear, though, is how long we should keep those documents and how to store them.
So, how do you manage personal documents to ensure you have what you need at your fingertips, without creating unnecessary clutter?
First, let’s look at tax records. According to IRS guidelines, you should retain your tax returns for three years from the date you filed your original return or two years from the date you paid the tax, whichever is later — if you file a claim for credit or refund after you file your return. (You should keep records for seven years if you file a claim for a loss from worthless securities or bad debt deduction.)
Your attorney or accountant will have copies of your tax records as well, making them easy to retrieve. Additionally, you can have your attorney or accountant scan and save documents to a thumb drive for you.
At CMFTO, we recommend keeping your tax records (hard copies and/or a thumb drive) in a fire-proof safe at home.
Other important documents — such as wills, trusts, deeds, and passports — should also be stored there. That way, the documents can be easily accessed, not only in the event of an emergency, but also for your descendants should the unthinkable happen.
Leaving behind clean, well-organized (and safely stored) documents is one of the best things you can do for your family. Not only will it save on time and hassle; it will make your intentions and wishes clear to your loved ones at a time when you may not be able to speak for yourself.
Finally, be sure to shred any documents you no longer need. Whoever assists you with document preparation (such as an attorney or bank officer) generally offers document shredding as part of their service. At CMFTO, we often refer clients to on-site shredding companies when cleaning out their homes, particularly when editing filing cabinets. These fully vetted and certified professionals will shred documents at your door, ensuring that your personal information remains secure.
This month, consider setting aside some time to review your documents and make a plan for updating, storing, and/or shredding your records, as needed. It might take a day or two, but the peace of mind you’ll gain by knowing that your most important papers are in order and stored safely will be well worth it.
All my best,