Yes, it is tax time. Many of you are going through your papers looking for needed documentation and are upset with your accountant (TurboTax®) or yourself. Why? Because you procrastinated till the last minute and then realized you don’t have the documentation that you need to file your taxes.
We recommend that you create a tax folder each year. Put all of your tax documents that you need and receive for the designated year in this folder. When each document comes to you, put it in this folder. At year end all of your tax documents will be in one place ready for when you have to prepare your taxes.
We see a common issue with missing cost basis needed to file taxes on investments sold in the past year that were bought possibly many years ago.
I can relate to all of the above.
Even though this is what I do for a living, it is easy to get bogged down with the papers you get.
I am often asked:
- What papers and information do I need to keep?
- How long do I need to keep this information?
- Do you have any recommendations for how to organize my financial information?
There are various kinds of documents that I put in different categories.
1. Important and Permanent Documents.
These documents are ultra important and you want to keep them forever. We recommend keeping them in a secure accessible place like a fireproof box or safe.
The documents that fall in this category are:
- Birth certificates
- Marriage certificates
- Separation and divorce agreements
- Real estate deeds, vehicle titles and property surveys
- Military records
- Current passport
- Stock certificates (more and more rare)
- Citizenship or naturalization papers
- Social Security cards (do NOT carry these around in your wallet)
- Family health and immunization records
- Proof of paid off loans (mortgage, student or auto loans)
- Will, Living Will, Health Care Proxy, and Durable Power of Attorney (only keep the newest version, since multiple versions can cause confusion)
Accessibility is important
I know several examples where clients have put their legal documents (especially their living will or durable power of attorney) in a safe deposit box and then when they needed it QUICKLY, the bank was closed for the weekend and they did not have access to these documents when they needed them most.
