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The Big Clean Out: File Cabinets and Tax Papers

The Big Clean Out

A How To Guide for Organizing your File Cabinet and Discarding Old Tax Documents

Happy tax day!  Hopefully you’ve already got your income taxes in the mail or sent via the internet.  Maybe you’re even enjoying a latte or pondering how your are going to spend your return (if you are one of those lucky folks).  Either way, it’s such a freeing feeling know that taxes are over for the time being and you can move on to think about other things.  It’s also a great time to clean out your files and get ready for the next tax year.

Last year I totally overhauled my file cabinet in preparation for tax season and have been amazed at how much easier things were this year as a result…everything from paying bills, to finding medical information, and even getting my tax papers in order only required seconds as opposed to hours to find and prepare.

Since sharing my file cabinet makeover on Money Saving Mom, several have asked:

What are your file cabinet labels and how often do you clean your out cabinet?

So today, I’m going to attempt to answer just that starting with the first part of the question–my file labels.  While it helps to understand my file cabinet drawers, for today’s purpose I’m just going to be talking about my financial information drawer or what I call our working drawer.  Our working drawer is where we file all our go-to supplies such as labels, bills and stamps as well as our auto, financial, home, insurance, and personal files all color coded by name and/or subject.

My File Cabinet Labels

Our Go-To Files

First in our working drawer are our go-to files–files we use on a weekly and/or daily basis to help us pay the bills.  In our cabinet these files are all pink.  Our Go-To files are:

  • Address labels:  a place for all those free labels you get in the mail–yes, we actually use them!
  • Bills:  when a bill comes in the mail or when my husband has a receipt from an expense it goes here until my weekly pay bills day when I input the bills/receipts into our budgeting software and/or pay them online
  • Budget Cash Envelopes: where we store our joint cash envelopes and empty envelopes for next paycheck
  • Coupons: which I gather and cut on Sundays to put into my coupon notebook
  • Ink to Recycle:  we recycle in at Staples where you can get $2-5 per ink cartridge you recycle
  • Receipts:  These are receipts that have already been entered into our budgeting software but that we need to keep for 30 days just in case we need to return something
  • Stamps

Our Reference Files

After that is our reference files which are grouped by category and then subcategory.  For our cabinet each category folder and subfolders are labeled with the same color for easy reference.  Personal records are color coded for each family member.  Our reference files are:

  • Automobile
    • Auto Insurance
    • Auto Repairs
      • A separate folder for each vehicle
  • Financial
    • Bank Records
    • Credit Reports
    • Investments
      • A separate folder for each investment type
  • Home
    • Insurance
    • Repair Records
    • Mortgage
    • Property Taxes
  • Insurance Policies
    • Dental
    • Disability
    • Health
    • Life
    • Flex
  • Personal Records
    • Will: a copy (we store the original in a lock box)
    •  Goose
      • Education
      • Employment
      • Medical
      • Social Security
    • Peanut (Peanut and Teacup don’t really need subcategory files yet since they are only 4 years and 19 months)
    • Me
      • Education
      • Employment
      • Medical
      • Social Security
    • Teacup
  • Income Tax
    • Each year has it’s own subfolder.  i.e. 2013   Throughout the year, anytime we receive something important in regards to the year’s taxes it goes in this folder.  When taxes are complete, we clean out the folder to only include the necessary documentation along with a copy of our tax return.  The rest is shredded.
  • Keep (this is for those special items you want to keep but you never know what to do with them)
    • Cards–only the most special and encouraging
    • Obituaries–of dear family and friends

While I realize this system may not work for everyone, it definitely helps us keep things in order and find things quickly when needed.

The Big Clean Out:  The Tax Papers I Keep and Those I Toss

With that said, the next step in preparing your file cabinet for next year’s taxes involve knowing what to keep and what to toss.  While  everyone has their own philosophy on how they get rid of paper clutter, here is a guide for what to keep, what to toss, and when to toss it.  Keep in mind, when discarding personal and financial records, it is highly recommended that you use a cross-cutting paper shredder to avoid identity theft.

Things I get rid of as soon as I input the information into our budgeting software and reconcile with our online bank records (weekly):

  • ATM receipts
  • Store receipts (unless I need to save it for a possible return or for warranty purposes)
  • Bank Statements
  • Utility statements (because I can always download a copy online if needed for a work-from-home tax deductible)

Things I get rid of after we submit our tax return:

  • Pay stubs (after reconciling them with our W-2s)
  • Social Security Statements

Things We Keep in Our Tax Return Files for 7 Years in Case of an Audit:

  • A copy of our tax return
  • Copies of our W-2s
  • Form 1099-DIVs
  • Form 1099-INTs
  • Our church contribution records and other charitable giving records
  • Goodwill Donation Receipts and a CD with pictures of those items donated
  • Receipt for Homestead Exemption

While this isn’t a complete list, hopefully it will give you a place to start as you start your big cleanout.  If you would like a more complete list of what to keep and what to toss, I highly recommend this detailed list by Jean Chatzky,  a financial guru.  On it she includes a list of items you need to keep as long as you have an asset, items you need to keep forever, and items you can toss after seven years.  Happy Clean Out Day!

Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed.  Romans 13:7

 

 

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Comments

  1. says

    Thanks for all the great info. I never thought to take pictures of the items that we have donated. I will for sure be doing that from now on. I’m visiting from Fluster Buster’s linky party.

    • says

      Technically you are supposed to for evidence. I don’t always, but I at least take enough pics for the $500 minimum documentation. You never know…. Thanks for hopping over!

  2. says

    I appreciate the list you provided for your reference files – I’ve been planning on moving our important documents from a box file system to a binder for awhile now and was having a hard time figuring out how I wanted to group things – this helps by giving me a start. Thanks! Found you thru Pinterest! :)

    • says

      That’s great! I totally know what you mean about just having a place to start when it comes to file names. ;) Glad it helped! Have fun getting organized.

    • says

      Technically you are supposed to have documentation of the items you donate. As long as it is not over $500 they probably will never check it, but should the amount be more than that AND you get audited, you have documentation to cover your tail. ;) Without pictures, a signature on a page is considered insufficient documentation.