Documents to Shred After Tax Season
Everyone has their own method of mapping out the year, but for many, it’s simply divided in two: before tax season, and after tax season. The period leading up to filing, is often fraught with tension, even for the most organized individual or business. After filing, residual tension can be explained by not knowing which documents to shred, and which to keep, but don’t despair—the answer is closer than you think.
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To Shred Or Not To Shred?
Once April has come and gone, you’re left with a great deal of paper; here’s what to do with it all.
Shredding is the only way to ensure the secure destruction of your personal or business documents.
- Payroll information. Monthly pay stubs should be examined at the time of receipt to identify any inconsistencies, and then stored securely (pay stubs contain vital information that can be used to perpetuate identity theft). At year end, compare the information on payment records against your W-2, and if no discrepancies are found, shred them.
- Bank statements. Banking records should be reconciled on a monthly basis, against deposit and ATM slips, and stored for use at year end. Once taxes are filed, documents can be shredded; if further information is needed, virtual records are typically kept by the bank.
- Credit card statements. Again, monthly statements should be reviewed for accuracy, but there’s no need to keep them unless they provide a record of purchases, or charitable contributions which may be needed for warranty, or tax purposes.
- Canceled checks. These can be destroyed after one year, sooner if you can easily obtain a copy through your bank.
- Investment account statements. Monthly, and quarterly statements should be stored securely throughout the year, but can be destroyed once you receive your annual statement, and taxes have been filed.
- Receipts. After tax season, keep only those receipts you may need to return a purchase. It’s a good idea to make digital copies of receipts used on your tax return in the event of an audit, prior to shredding hard copies.
STORE (Short Term)
While it may be freeing to be paperless, there are a few more items you should hang on to temporarily.
- Proof of investment purchases. Keep records on file until investments are sold, after which time records will be needed for tax filing.
- Loan documentation. Closing documents should be stored securely, until repayment is complete.
STORE (Long Term)
Secure storage of seven years or more is required for the following documentation.
- Life insurance. Term policies can be shredded at the term’s end, but all others should be kept indefinitely.
- Long term financial planning. Pension plan information, wills, POA’s and trusts, should be stored securely.
- Tax returns, including supporting documentation. Retain state and federal tax returns for a minimum of seven years, after which you can either shred them, or make digital copies.
- Vital personal documents. Keep the original copies of items such as birth certificates, marriage and/or divorce papers, Social Security identification and passports.
Document Shredding This Tax Season in VA, MD & DC
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