By now you’ve received emails and letters with “important tax information enclosed” and year-end investment statements, and more are likely on the way. You know you need these to file your 2018 tax returns, but after that, what do you do with them?
Over at HumbleDollar, Ross Menke suggests a three-“bucket” system for personal and financial documents, depending on the importance of the documents and their legal requirements:
This bucket is for all of the documents it would take a lot of effort to replace., including your (and your family members’s):
One other item should go here, according to Menke: Roth IRA contribution history. “The annual contributions you’ve made to your Roth IRA can be withdrawn at any time tax- and penalty-free,” writes Menke. “You want to keep track of how much you’ve contributed, as that may be difficult to remember 20 years from now.”
This one is for the mail you’re receiving now. Keep any tax-related documents and other info for three to seven years, the IRS suggests, including:
If you don’t file a return, keep them forever (although you’ll likely have bigger problems than some lost paperwork).
This bucket, Menke says, is reserved for your other records:
There’s really no reason to keep these longer than one year. Now, where are you storing all of these documents? We have some suggestions here. Another idea, particularly for those life-long docs, is to get a safety deposit box or fireproof safe, Menke suggests.