• Olivia Royal

Spring Cleaning Your Finances

Updated: Mar 6, 2019

The first when hearing “Spring Cleaning,” is usually tidying our house, but what about our filing cabinets? Before you add this year’s tax documents to overflowing folders, why not do some Spring Cleaning? This year is your chance to organize your financial paperwork! By using these five (5) steps you will be better equipped for 2020 tax season and have a structured catalog of documents.

1. File Retention.

One reason for bulging folders is not knowing which forms to retain and for what amount of time.

Tax Returns: Keep copies of all tax returns.

Supporting Tax Documents and Receipts:

The IRS States:

- Payroll records should be kept for six years.

- Failing to report income worth more than 25 percent of your gross amount reported, will be held liable to the IRS for six years.

- Generally, the IRS can include returns filed within the last three years in an audit. *If they identify a substantial error, they may add additional years.

- To be safe, hold onto records for six years.

Documents to Support an Insurance Claim: Ask your home, rental and auto-insurance company’s agent which documents are required to have on file and what length of time.

2. Digital Copy.

Use a scanner to make digital copies of financial records and other important forms. Digital copies are more convenient, organized, and helps the environment. If you are worried about a system malfunction (i.e. computer crashing), the answer is in Step Three.

3. Backup Files.

Once documents are scanned and systematically saved to a computer, backup these files onto a hard drive. Choosing to store files on one hard drive is a risk, whereas, having two backup systems decreases the possibility of losing data.

4. Monitor Bank Account(s).

Always know how much you have in each of your bank accounts, while closing any inactive accounts.

5. Shred.

Cleaning out excess paperwork and decluttering files is rewarding. When throwing away personal information (i.e. bills, receipts, reconciled bank statements, canceled checks, etc.) you risk becoming a victim of identity theft. To protect yourself and your identity, always shred paperwork which contains any personal information.

References:

https://www.irs.gov/businesses/small-businesses-self-employed/irs-audits

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Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through GWM Advisors, a registered investment advisor. GWM Advisors and SouthernPoint Investment Partners are separate entities from LPL Financial.

 

The LPL Financial representative associated with this website may discuss and/or transact securities business only with residents of the following states: AL, CA, FL, GA, NC, PR

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