Spring
Cleaning
L
ike clockwork, every spring we clean out
and organize the garage, weed though
the clutter in the kids’ rooms, and clear
the cob webs from the rafters. But what about
clearing out all the fi nancial documents, bills
and statements we accumulate? • Mortgage documents, mortgage statements
and HELOC statements. Keep mortgage
documents for the ownership period of the
property plus ten years to permanently. Keep
mortgage and HELOC statements for the
ownership period of the property plus seven
years.
First off, I highly recommend using a fi reproof
safe or password-protected electronic fi le to
store your retained documents. The following
are suggestions for retaining some of the most
common fi nancial documents: • Tax records pertaining to real property or “real
assets” should be kept for as long as you own
the asset, and for at least seven years after you
sell, exchange or liquidate it.
KEEP FOR 7 YEARS:
• Federal and state tax returns. The IRS has
three years from your fi lling date to audit
your return and six years to challenge your
return if it believes you underreported gross
income by 25 percent or more.
By Daniel T. Newquist,
CFP®, AIF®
Dan Newquist, CFP®, AIF®,
Principal & Senior Wealth
Advisor with RNP Advisory
Services, Inc., a registered
investment advisor, Morgan
Hill. He can be reached at
408-779-0699 or dnewquist@
RNPadvisory.com. Securities
offered through Foothill
Securities, Inc., member
FINRA/SIPC, an unaffiliated
company.
• Bank, credit card statements, and expense
receipts. Keep statements, cancelled
checks or receipts detailing itemized
expenses claimed on your federal return,
medical and health insurance payments,
mortgage payments, home improvement
expenses, business expenses or charitable
contributions.
• Payroll statements, W-2 and 1099 state-
ments. If you own a business or are self-
employed, retain your payroll statements
for seven years or longer.
KEEP WHILE ACTIVE TO PERMANENTLY:
• Investment account statements, retirement
account statements, and Form 1099s. Keep
annual statements and 1099s until you close
the account, and then up to seven years
after the last security in the account was
sold. (Hold on to your quarterly statements
until you get the annual statement).
• Cost Basis. Retain any record of your
original investment in any type of security
until you sell the investment. This will help
determine capital gains or losses. Custodians
are now required to report on cost basis of
investments, however they may not have cost
basis information on certain types of securities
held in your account, especially if purchased
elsewhere and transferred into the account.
• Employee benefi ts statements. Keep the most
recent year-end statement on fi le.
• Paycheck stubs. Keep until you receive your
W-2 form from your employer each year.
• Insurance. Life, disability, health, auto, home …
keep for the life of the policy plus three years.
Invest in a safe-deposit box for papers that can’t
be easily replaced: Original birth and death
certifi cates, Social Security cards, passports,
estate documents, wills and trusts, life-insurance
documents, marriage and divorce decrees,
military discharge information, vehicle titles
and loan documents. If you choose password-
protected electronic storage for your documents,
make sure to keep a back-up copy on a drive
that is stored in a fi reproof safe or safe-deposit
box. For security and protection of your identity,
dispose of all sensitive documents by shredding or
other secure means.
This article is intended for educational purposes only. It is not intended as investment
advice. Always consult your fi nancial or tax-planning professional for guidance
with respect to your specifi c situation.
74
GILROY • MORGAN HILL • SAN MARTIN
MAY/JUNE 2016
gmhtoday.com