Organize This! Managing Piles of Paper - What to Keep and What to Let Go

By Stephanie Calahan (Calahan Solutions, Inc)

Is paperwork taking over your life? Are you keeping every single bill, tax return, insurance invoice, medical documentation, contract and even the 15-year-old warranty for the water bed that you sold at the yard sale ten years ago? If you answered "yes," you are not alone. Many people are not sure how long financial records retention should last, especially tax records.  Determining what to keep and what to toss is often a difficult decision for homeowners.

Some documents and records need to be kept indefinitely but, many can be discarded after a prescribed period. Here are some general rules to follow on how long you should keep various records.  Please note there are personal instances where documentation is required to be kept longer than our guidelines suggest.  Check with your financial or tax advisor if you have questions.

How Long Do I Keep It?

If you would like a handy guide to remind you of what to keep and what to let go, check out How Long Should You Keep Papers in Your Home - Ideas for 76 Kinds of Residential Paperwork. I created this special report to help me figure out how long I should keep various types of information and have found that my clients love it too.

To get you started, here are a few rules of thumb:

Tax Returns and Backup Documentation: Whether personal or business, the general rule is seven years. This may seem like a long time to hold onto these papers, but think of it as an annual cleaning out as new returns are filed. One in … one out and the old adage of "better safe than sorry" will apply. The IRS has three years to audit you from the date you file your taxes; however, they have seven years to clear up and correct so called "Discrepancies."

Click to read more ...