And by cleaning house, I mean I went through my filing cabinets (yes, I have 2) and condensed ALL of our records into what we actually need. I had medical benefit statements from 2006 and tax filing records all the way back from 2000!! While it was a nice walk down memory lane, I still haven’t finished shredding all this stuff because my poor shredder keeps overheating and shutting down. If we had a fireplace or fire pit, I’d have burned it all because it would have been a whole lot easier!!
In case you’re wondering, here’s what you really need in your filing cabinet:
Tax returns (taken from the IRS website):
You owe additional tax and situations (2), (3), and (4), below, do not apply to you; keep records for 3 years.
You do not report income that you should report, and it is more than 25% of the gross income shown on your return; keep records for 6 years.
You file a fraudulent return; keep records indefinitely.
You do not file a return; keep records indefinitely.
You file a claim for credit or refund* after you file your return; keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later.
You file a claim for a loss from worthless securities or bad debt deduction; keep records for 7 years.
Keep all employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
(Personally, I hold on to my tax statements for 7 years, but that’s just me. My accountant sends me a manilla envelope with it all nicely contained, so I add receipts or anything else that contributed to to the filing and file it away.)
Bank & Credit Card Statements: “Credit card and bank account statements: Save those with no tax significance for about a year, but those with tax significance should be saved for seven years.” —FDIC Consumer News
Medical Bills: (God, I have so many of these!) Once they’re funded, toss them, unless you’re planning on deducting them on your taxes, then keep them. Personally, I’m keeping 2014’s until my appeals are all settled.
Insurance Policies: Keep your current policy, toss/shred the rest.
Business & Business Expense Records: Since these are reported, keep them for 7 years.
Hopefully you’re able to ditch some paper clutter like I was today!!
Thanks for reading,
(P.S. I am in no way a financial expert or accountant. These statements are just a consensus I found across many different websites or from the IRS itself. Always consult a professional with any questions or concerns!!)