Tax season can be taxing but you can do a lot of spring cleaning in the process. If you’re like me, you’ve got stacks and stacks of papers that you don’t need and they are just creating a huge mess! To help you clear the cobwebs from your mind and from your living space --- and go green at the same time --- here’s some advice on what to shred and what to keep.
What to Shred
It’s important to be aware of what information appears on your documents and mail. If it shows your account number, social security number or other secure information, you should shred it. Offers from financial institutions should be shredded too, even if they only show your name and address. This will help prevent identity thieves from digging in your trash and signing themselves up for some cash under your good name.
How to Shred
There are many personal shredders you can buy, and this paper shredder buying guide can help lay out the differences. You can also use a shredding service, or stores like Staples® can shred your documents in the store. Some communities or shredding companies host shredding events too, just do a search online.
Reduce Paper & Go Green
To reduce the amount of paper you have to organize, opt for e-mail delivery of statements and bills and make your payments online. To reduce junk mail, request email communications, or ask to be removed from most mailing lists. Check out PrivacyRights.org and you’ll find a guide on how to get your name removed from a many different lists.
What to Save
Here is a handy guide to help you decide what goes in the trash and what stays, and another guide for how long to keep financial records. Here are some of the major types of paperwork you should keep:
Bills and Account Statements
As a general rule it is safe to say that you can dispose of these documents once you can confirm that the bill or invoice has been paid.
Tip: Eliminate the majority of this type of paper clutter by using online account management. Most companies make your past statements available to you online for a range between twelve months to three years, but check with your payees to see what they offer. Then if you need something you can just print it out!
Insurance policy documents need only be kept while the policy is in force. On renewal you will receive a new declarations page to replace your old one, and can discard the old declarations page after you review any changes made to the policy. Be sure to keep the documents for life insurance policies as long as they are in force.
The IRS advises that tax documents should be retained for seven years. You should also keep any documents pertinent to your returns, for example anything you would have submitted with the return.
Legal documents include things like wills, powers of attorney (POA), certificates of marriage, birth and death, or divorce decrees (life event documents) among others. The current and active copy of any changeable document like a will or POA should always be kept, and all of your life event documents should also be permanently retained. If you are still not sure if you need to keep a piece of paper it is always best to check with your attorney or accountant. You may want to keep your legal documents in a fireproof safe or bank safety deposit box. Going green takes a little bit of effort to set up, but will help you stay organized and clutter-free.
Remember to always shred documents that contain any sensitive information and keep only what you have to keep. Decide what works best for you and share your best practices with us in the comments!