Making Cents: Don’t Let Your Trash Become Someone Else’s Treasure
By: John P. Napolitano, CFP®, CPA, PFS, MST
It’s a technologically influenced world, and we hear a lot about cloud computing and being paperless. I don’t know about you, but the piles of paper still seem to be there and the only way to manage that ever growing pile is to have an efficient, secure, filing and disposal system. Being careless with the storage and disposal may leave you vulnerable to criminals looking to steal your money and identity.
In terms of filing and storage, ensure that your filing cabinets are securely locked. Consider scanning your important documents into a secure, encrypted storage medium and keep your originals in a safe offsite storage facility.
More common than people breaking into your home for confidential information are dumpster divers who steal your personally identifiable information from the trash. Be it an old tax return, a copy of your W-2 or an insignificant document containing your signature. How long should you save these things and how do you properly dispose of them?
In terms of document retention, there are some documents that are wise to keep for a period of time. Starting with tax records, you only need to keep 3 years on hand. However, many tax pro’s suggest retaining 7 years. The tax documents that should be kept are the actual pages filed with the supporting forms like W-2s and 1099s. Save backups for deductions or any other positions that you’ve taken on your tax return. This may include voided checks, invoices or bank statements for deductible items.
Home improvement records should be kept 3-7 years after selling the home. You’ll need to calculate your basis (that’s cost in tax speak) to properly report the sale on your tax return. If you’ve already tossed the list of improvements made in the past, start now with a list of the improvements that you’ve made to back up your basis calculation. Retain copies of your deed, closing documents and any mortgage information from the closing until 7 years after you sell.
Maintain copies of all inforce insurance policies. Last year’s auto policy can be destroyed once the new one is issued, but all active policies for life, disability or long term care should be retained.
For investment statements, supporting trade tickets or performance reports, you should retain the monthly statements until you receive the year end statement to ensure their accuracy. Ensure that these statements show your cost basis for all holdings, then retain up to 7, year-end statements.
Under the radar screen are address labels for direct mail, magazines or credit card receipts. These too should be properly disposed. Proper disposal may not include that old $20 shredder in your home. Get a cross shredder or use a certified disposal company.
John P. Napolitano CFP®, CPA is CEO of US Wealth Management in Braintree, MA. Visit JohnPNapolitano on LinkedIn or uswealthnapolitano.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and US Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200. 1-961371