Spring is upon us, hopefully, we are through with snow for the year. Many individuals see this as a time to do spring cleaning – and certainly is a great time to get rid of paperwork that is no longer needed. What can you get rid of? What should you keep?
We have seen many deaths resulting from COVID and other causes. There is an aging population moving out of homes they have lived in for 20+ years. We have extended families combining households as the need to minimize expenses occurs. With many of us having spent more time in our homes in the past year than ever before, you may find that you have accumulated paperwork and other items. Now may be a great time to sort through those attics, basements, closets, and garages to clean them out.
To clean areas – the school of thought is to get three boxes. The first box you should fill with items that you want to donate. The second one you should fill with items that you want to throw away. The third box is items that you want to keep. Once you have cleaned an area, put back the items you want to keep in an organized fashion.
You may want to add a fourth box of items you want to sell. Only add this box if you will get them listed for sale quickly. You do not want to have these put into the box that you trip over for the next year or more.
In determining if you will keep something – we hear all the time, “I want to keep this to pass onto my children or grandchildren” or someone else. I would suggest that you ask that person if they really want something. When individuals ask the questions, they find out the next generation does not want the antique furniture or grandma’s china. They may want a piece or two of grandma’s china or grandpa’s favorite hammer to remember them. Most will not want a twelve-piece set or a garage full of tools. Find out what they want, get it to them, and get the remainder of it out of the house.
The other items we often find filling basements and attics are your child’s childhood memories – old ice skates, the cheerleading pom-poms, and the Mickey ears from visiting Disney. We have two recommendations for getting these items out of your house. One put them all in a box, and next time your child visits, put it into their car to take to their house. It then becomes their decision to decide what to do with it.
Your 2nd option – give your child a deadline date to get “their stuff” out of your house. Give them 30 or 60 days to get whatever they want out of the house. The rest goes into your boxes from above. No excuse that they do not have the room. If they really want something, they will find a closet or basement of their own to put it into.
Paperwork sorting is a little different. Whether this is your paperwork or paperwork that you inherited from cleaning out someone else’s living space, you can process it the same way.
Tax returns – we recommend that you keep seven years from the filing date. IRS and the states can technically review only three years back. However, if they suspect fraud (underreporting of income by more than 20%), they can go back seven years. So, we recommend keeping seven years just in case.
Generally, with those tax returns are some other items you may want to keep longer. Your W2s prove wages earned. You want to know that wages recorded for Social Security purposes are accurate. If you have reviewed your earnings record with Social Security and know it is accurate, you can shred your old W2s. If you have not, we recommend keeping them until you have done so.
If you report business or rental income on your tax return, you will want to hold onto the receipts for any items still being depreciated. You may need the documentation for improvements or equipment being used to prove basis at the time of sale.
For deductions or expenses that you reported on your tax return, you should keep those receipts for seven years if you need to prove the cost of these items. This would include utilities, supplies, property or payroll taxes, rent receipts, etc.
If, however, you are not taking a deduction for these items on your tax return, these documents do not need to be saved. If you are storing utility bills in a file cabinet to clean that cabinet out at the end of the year and put them in a box to store that box in the basement, explain why. Once you get the next month’s bill and it reflects the prior month’s bill as paid, what purpose can that paid bill serve? Consider tossing the old paid bill when the new one comes in if you cannot think of one.
If that receipt or bill can serve a purpose, such as documentation for a warranty, it makes sense to keep it. Otherwise, save yourself all that space and get rid of those bills and receipts. That is true for utility bills, grocery, and household receipts. Keeping canceled checks or credit card statements make sense for warranty information but serves little purpose otherwise. Think about it when you handle a piece of paper – is there any reason you might need this paperwork later? If not, get rid of it. If you think you may need it, maybe you keep it to the end of the year and then toss it when you realize you did not need it.
What do you need to shred versus what you can recycle or throw out? Does the piece of paper contain personal information? A piece of mail with your address on it contains information that is public. There is no need to shred it. What can be gained by getting a hold of a piece of junk mail containing your address? By someone getting a hold of a utility bill or a property tax bill? Can someone benefit from seeing a grocery receipt or school paperwork? If you purchased a picture, a kitchen gadget, or household supplies, those receipts do not need to be shredded. No one can benefit from seeing what you paid for those items. Receipts do not show the entire credit card number, so even that is not beneficial for someone. Property bills are public records. There is nothing anyone can learn from them that they cannot find on the Internet.
A credit card or bank statement that contains information that could potentially be damaging if someone got a hold of it needs to be shredded. Identity theft is real and should be of concern. Be extremely careful about anyone getting a hold of paperwork with a financial account number on it – credit card account numbers, bank account numbers, tax returns, or investment statements. Avoid anyone being able to get a hold of paperwork with your driver’s license or date of birth on it. These are items you need to shred.
Medical identity theft is as prominent as financial theft. Be concerned about who can get a hold of insurance information that might allow them to steal your medical identity. If a medical bill contains your insurance card information, shred it. A prescription receipt or a paid doctor’s bill with no medical insurance information can be recycled and does not need to be shredded.
How much paperwork do you have stored in file cabinets, desk drawers, closets, the basement, in the garage, or the attic? Find two empty boxes. One for paperwork that must be shredded. A second one for paperwork that can be recycled. Paperwork that needs to be kept should be organized into a file cabinet, a strongbox, or boxes.
It may seem overwhelming when you look around the house and see all the areas you need to clean. Have you ever heard, “How do you eat an elephant? One bite at a time”. Think of the same philosophy about spring cleaning. Take it one closet, one shelf, one room at a time. Agree to set aside a morning a week or an hour a day, whatever works into your schedule. Reward yourself each time you complete a space – just not by purchasing more “stuff” that several years from now you will be cleaning out again.
If you have any questions about keeping, shredding, or throwing something out, please give us a call or send an email, and we will help you out. We have been shredding client documents and running the Mom’s House garage sale for years to help you with your spring cleaning. It is always a good time to do a little spring cleaning!!
