What to Do With All the Tax Documents You Receive Now
By now, you have received emails and letters with “important tax information attached” and investment reports for the end of the year, and most likely more. You know you need them to file your 2018 tax return, but what do you do with them after that?
Ross Menke at HumbleDollar offers a three-tiered system for personal and financial documents, depending on the importance of the documents and their legal requirements:
Documents forever
This basket is for all documents that will require a lot of effort to replace, including yours (and your family members):
- Passports
- Birth certificates
- Social Security Cards
- Ownership deeds
- Car names
- Marriage certificate
- Wills
- Power of attorney
- Tax return
- Life insurance policies
- Medical receipts if you have an HSA (because as I wrote yesterday , you can reimburse medical expenses in later years)
There is another subject to be placed here, Menke said: the history of the Roth IRA’s contribution. “The annual contributions you make to the Roth IRA can be withdrawn at any time without paying taxes or penalties,” Menke writes. “You want to keep track of how much you’ve contributed as it can be difficult to remember in 20 years.”
Maintenance of tax materials
This is the letter you are receiving now. The IRS offers to store all tax documents and other information within three to seven years, in which:
- W-2s
- 1099s
- Proof of any deductions you claim
If you do not file your return, keep it forever (although you are likely to have more serious problems than lost documents).
Annual documents
This bucket, according to Menke, is reserved for your other entries:
- Monthly bank statements
- Credit card statements
- Accounts
- Payment receipts
There is really no reason to keep them longer than one year. Where do you keep all these documents? We have several suggestions . Menke suggests another option, especially for those who work for life, is to get a safe or a fireproof safe.