I know, it’s summertime and nobody wants to think about paperwork, taxes or anything remotely connected with the IRS. I agree, sorting paperwork and paying bills makes me itchy, crabby and hot, and not in the sexual sense. And then there’s that never ending dilemma: what should I save and what can I shred? If you subscribe to my husband’s policy on paperwork, everything gets clipped on a large brass clip until it gets so full that the nail that holds the clip lets loose from the drywall. Then after a brief hailstorm of naughty words, he releases the clip and papers spew everywhere: bills, receipts, pictures the kids drew two years ago, a recipe for kielbasa, newspaper clipping of obituaries, the title to his motorcycle, envelopes from bills, old church bulletins…you get the picture. And then I, who have a system of sorts, have to wade through the morass.
After 22 years together, I probably won’t get him to be more organized, but there may still be hope for you, if you are a paper hoarder. This is a simple straight-forward list of what papers you need to save for budgeting and tax time. At least that will help you with some of the paper tsunami. You’re on your own with the rest.
Receipts: (note: don’t throw receipts with your credit information in the trash).
-After one week: Get rid of grocery only receipts. Save receipts from all purchases for at least a week. Receipts for grocery items you can shred after a week because you’ll no longer be able to return food after a week or so.
-After three months: Save receipts for non-income tax related products for three months. That’s about the maximum time most stores will allow you to return an item.
-After one year: Save receipts related to your work, educational expenses, college tuition, hospital bills, medical equipment and prescriptions, eyeglasses, braces, contacts, hearing aids, ‘green’ home improvements (new windows, new roof, solar hot water heater, energy efficient siding or appliances), Even if you can’t necessarily return for refund, these are tax deductible. If you purchased extended warranties, save the receipts longer.
Utility Bill receipts: save these bill receipts for one year: utility bills: water, sewer, gas, electric and garbage. You may qualify for the Home Heating Credit. Also save DSL, cable and Internet receipts; these can be claimed on your home business income if you write articles.
Hospital bills and health insurance premiums: paid for with ‘post-tax’ dollars are deductible. If your employer deducts your insurance costs from your salary and then taxes you, they are not deductible. Any health insurance you carry on yourself is tax deductible.
Donation Receipts:Receipts to public institutions and some private charities are tax deductible. Save for one year and attach to your tax forms for your own documents.
Receipts for paid child care: child care expenses are tax deductible. Conversely if you care for children in your home, you may be able to claim costs incurred (food, use of utilities)
Pay check stubs: save for one year
Unemployment benefits: save for one year
Receipts from any government assistance you may receive: It may not be taxed, but you may be called upon to show what you received.
Economic Stimulus Checks: Yup, we were taxed on Bushie’s little ‘incentive’.
Sales receipts from vehicle or property. It’s a good idea to save receipts for repairs made to the car.
Property tax statements, Mortgage Interest Payment statements
Bank statements, checking account statements, credit cards statements: save for one year
Tax returns: save for seven years at least; this is roughly how far back you can be audited. I personally save all our returns.
Well, hopefully this has gotten you out of at least some of the paper swamp and back in your spouses or partner’s good graces.