 Slaying the Paper Dragon - Financial Advisor's Guidelines for Document RetentionFinancial Advisor Teresa Bear Explains About Financial Spring Cleaning
By: JC Grason of Mesa, LLC Teresa Bear, CFP(TM), CPA and CEO of JC Grason of Mesa, was recently featured in Lovin’ Life After 50’s April Newspaper. Her column The Bear Market Report featured an article entitled Slaying the Paper Dragon! To read the article, click on the following link: www.jcgrasonmesa.com/ In response to the question, “It’s tax time and I am drowning in paperwork! What should I keep? What should I toss?”, Ms. Bear explains in the article: Tax time is an excellent time for a little financial spring cleaning! Your question is a great one debated in legal circles everywhere. She continues with: In my younger days I was a bit of a compulsive bookkeeper. I kept every receipt, every bill, every check stub – the list went on and on. Now I’ve streamlined the process. In general, most receipts don’t need to be kept unless they are tax or warranty related. It’s also a good idea to keep receipts if there’s a possibility that it might be necessary to prove payment at some time in the future. Bank statements, utility bills and pay stubs should be kept for one year – credit card statements for three years. In general, tax records should to be retained for 6 years. This includes your return as well as the supporting documentation – W-2’s, 1099’s, cancelled checks, cost basis of assets sold, IRS correspondence and audit reports. (However, if you have not filed a return and were required to do so or have knowingly filed a fraudulent return, you must keep your tax-related records forever.) If you own an asset that will be sold some day and the gain (or loss) will be reported on your tax return, those documents need to be kept until the asset is sold – and then placed with your tax records for the year of sale. I find that this can be challenging. For instance, many people worked for employers and bought some employer stock with each paycheck. The company grew and the stock split and at some point in time, that person sells the stock. At tax time the CPA says “How much did you pay for this?” “Yikes! The same rules apply to real estate. When you purchase a house, the most important documents are the mortgage, the deed and the closing statement (the HUD statement). These should be kept until six years after the house is sold. Additionally, if you make major improvements to your home, those receipts should be kept as well since they reduce the gain that you eventually report on the sale. For your personal residence, the gain is not taxable under many circumstances, but if you convert your residence to a rental property, those records become critical. Medical insurance and property and casualty insurance paperwork should be kept for 3 years (6 years for accident reports or claims). This includes policies, claims and bills - just in case there is a dispute. Some records should be kept permanently. Medical records, birth (and death) certificates, marriage licenses, (and divorce decrees), military discharge papers, mortgage “Paid in Full” notices, and legal contracts should be kept forever. Additionally, estate planning documents such as wills, trusts and powers of attorney need to be kept unless they are updated by a new version. Likewise, annuity and life insurance contracts should be kept until they are replaced or liquidated. Make sure that your old documents are properly disposed of. According to the Federal Trade Commission, identity theft was the #1 consumer fraud complaint in 2009. It is estimated that more than 9 million Americans have their identity stolen each year. Research shows that most identity thieves obtain information through traditional paper-based sources rather than by electronic means. Shredding or otherwise destroying your documents helps protect your privacy and prevent identity theft. For additional information about identity theft, the Federal Trade Commission’s website is extremely helpful. You can visit it by clicking http://www.consumer.ftc.gov/ If you would like to download a free copy of How Long Should I Keep My Records, click here: http://www.jcgrasonmesa.com/ To learn about Teresa Bear, stop by the offices of JC Grason at 4864 E Baseline Road, Suite 109 in Mesa, AZ; visit www.TeresaBear.com; or call 1-480-503-0050. Teresa also entertains web visitors with her creative blogs – www.TeresaBearBlog.com, and http://travels.flatteresa.com/ For more information on how Teresa Bear can help, please visit www.teresabear.com. About Teresa Bear: Teresa Bear is the President of JC Grason of Mesa, LLC and specializes in retirement planning and asset preservation for retirees and their loved ones. She has been a Certified Public Accountant practicing in the area of taxation for more than 25 years and is also a Certified Financial Planner ™. She is also an Investment Advisor Representative with Brookstone Capital Management LLC, a SEC Registered Investment Advisor. Teresa is a graduate of Graceland University in Iowa and has an MBA from the University of Kansas. She is also the author of the book She Retired Happily Ever After. Teresa has been featured in the USA Today, The Wall Street Journal and Woman’s Day Magazine and has been seen on ABC, NBC, CBS and Fox affiliates around the country. The information in this press release describes general guidelines and suggestions for retaining personal records. In no way should it be deemed as advice for any individual circumstance or situation. It is always your responsibility to use your best judgment before destroying any document. Additionally, you should seek the advice of your accountant and/or attorney before destroying any financial, legal or tax record. Photos: https://www.prlog.org/ https://www.prlog.org/ https://www.prlog.org/ End
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