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Ready, Set, Shred!

January 17, 2011

Gunwel Tax & Bookkeeping is a paperless office. I say that with pride now, but as the staff will attest every time we shred, I always ask, “is it in the cloud yet?” And they must say three times (similar to Dorothy and the red slippers) that I have nothing to worry about. Then the shredder goes off and I pray. After all these years we haven’t lost a record! So when clients ask me what they need to keep, I used to tell them keep it all in the cloud. But soon found that unless you were a business professional those services  could be an unecessary expense. So I then told them the facts: 

  • Bank records. Keep deposit and withdrawal slips until you get your bank statement each month. Retain monthly statements for seven years in case the IRS audits you. Ditch CD records after the accounts mature and you collect the interest you’re due. The same advice applies to loan documents after you’ve paid back all the money that you borrowed, with one exception. Don’t burn your mortgage after you’ve paid it off. Keep it as proof of how much you paid for you house so you can calculate the tax, if any, on your gain when you sell it.
  • Investment account documents. Shred monthly and quarterly statements, but keep annual statements for seven years. If you still hold stocks in certificate form, ask your broker to hold them for you electronically.
  • Retirement-plan records. Retain your annual 401(k), IRA and Keogh statements. If you’ve made nondeductible IRA contributions, keep Form 8606, which you must with your tax return. It proves that you’ve already paid taxes on money in those IRAs.
  • Credit-card receipts and bills. After you pay your bills each month, staple to your statements any receipts you might need to return defective goods that you bought with that credit card. After one year, shred the receipts. You can do the same with your credit-card bills unless you need them to support tax deductions. In that case, hold them for seven years.

Give Gunwel a call at 212-979-6830 if you have any questions on what to keep. We are here to help you with all of your financial needs. Gunwel feels you work hard for your money, so let us work smart to help you keep it! See you soon!

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