WHAT TO KEEP Remember that most information is now available online so you don’t need to keep utility bills, bank statements, or company advertisements. There are some security concerns with digital storage, so protect your sensitive data, such as bank sign-ins, with strong passwords. Keep physical copies of legal and medical paperwork, warranty information, and paperwork you may need when filing taxes. IRS.Gov provides the following information in regard to the period of limitations that apply to tax returns: 1. Keep records for 3 years if situations (4), (5), and (6) below do not apply to you. 2. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later if you file a claim for credit or refund after you file your return. 3. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction. 4. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return. 5. Keep records indefinitely if you do not file a return. 6. Keep records indefinitely if you file a fraudulent return. 7. Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later. With all of that in mind, you can let your supporting documents go, but keep your physical tax returns forever. They may come in handy as a record of your income when it comes time to claim social security. For legal documents, always keep a paper copy in a safe place. Remember to review them at least once every five years, or more often if you have a major life change event, such as a death in the family.
WHAT NOT
TO KEEP
Once you’ve reduced your intake, organized the flow, and decided what’s essential to hold on to, it becomes clear what not to keep. Store brochures, recipes, product manuals, menus, and coupons can all be found online so if you’re looking for ways to purge the paper, this list is a good place to start. You can also eliminate most receipts from restaurants and gas stations unless you need to save them for tax purposes. There’s no reason you have to part with every shred of paper in your home, but if you want to reduce for environmental, space, or stress reasons, you can create a nearly paper-free home by leaning into the digital space. Scan documents, take pictures of anything you may need to reference, and be sure to place all electronic data in clearly labeled folders online where you can find it again. It’s just as important to be organized with digital information as with paperwork! Also, backup your files on a regular basis. You will rarely ever need to access these documents, so be selective in what you save or you’ll find yourself overwhelmed with digital folders. At tax time, set aside a few hours to review your digital files so you can delete those you no longer need and reorganize the rest.
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