It's that time of year again. Dare I say it ... tax time.
The first step for tax season should be organizing your financial documents. Getting on top of your important papers now will make the process all that much easier (especially if you put off doing your taxes until the last minute). Here are a few things to keep in mind:
Charitable donations. Your canceled checks for cash contributions can be used when filing. You'll also want to gather up any receipts for used clothing or property donations. Additionally, make a list of the times you donated money to your church or temple or tossed a couple bucks into the Salvation Army's bucket at Christmas.
Medical expenses. Keep tabs on the receipts and fees for all things medical. This includes (but is not limited to) your health insurance premiums, dentist visits, and eyeglasses.
Miscellaneous items. Any money you spend on financial planners and tax advisers (even computer programs) can be a tax write-off. So be sure to keep track of these items, as well as work-related items like subscriptions to trade and professional journals or business expenses for which you didn't get reimbursed.
Jean Chatzky’s Bottom Line
This week: What not to throw away
As you do you pre-taxes spring-cleaning, remember you'll need to keep some financial papers longer than others. Some you can throw away now, some at the end of the year, while you'll want to hold on to others indefinitely.
These are the papers you need to keep — and how long you need to hold on to them:
- ATM receipts and receipts for purchases — until you get the monthly bank and credit card statements and make sure these reconcile; then keep the monthlies and throw out the individual slips.
- Bills and bank and brokerage statements, including cancelled checks — until you get the year-end statement, check it over, and make sure everything reconciles; then throw out the monthlies and keep the annual statement.
- A list of credit cards, the account numbers, and the 800 numbers you'd use to report a loss or theft — indefinitely.
- A list of items in your safe deposit box, with a running account of what you put in and take out — indefinitely.
- Tax returns — six years; indefinitely if they include information on the purchase or sale of a home or an IRA.
- Receipts for appliances and home improvements — until you sell the home.
- Warranties — until they expire.
- Employment records, including letters of recommendation — indefinitely.
- Receipts for large purchases — indefinitely; for insurance purposes in case of a fire or other home emergency.
- Year-end brokerage statements or other documents relating to buying and selling stock — indefinitely; you may need them to account for your cost basis.
- Insurance policies — as long as you own the policy.
- Deed to your home — as long as you own the home.
- Wills, trusts, and other estate-planning documents — indefinitely.
- An inventory of where important documents are kept and a list of phone numbers (doctors, lawyers, accountants, neighbors, children) to be called in case of emergency — indefinitely.
Jean Chatzky is the financial editor for “Today,” editor-at-large at Money magazine and the author of “Talking Money: Everything You Need to Know About Your Finances and Your Future.” Her latest book, "Pay It Down: From Debt to Wealth on $10 a Day," is now in bookstores. Copyright ©2005. For more information, go to her Web site, .