Taxes - Head Matters

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9. Keeping Good Records


Organizing a home filing system
A system for personal records is a necessity. No matter how small your home might be, you need a special place to keep your papers. Records, regardless of the filing system used, should be reviewed at least once a year to throw away items no longer needed. January is a good time for an overhaul, since it's just before you begin to work on taxes.

The equipment you will need doesn't have to be fancy. Think about a filing cabinet or even specially labeled envelopes before you think about a desk. If you don't have space for a small cabinet, buy accordion folders, a storage chest that fits under the bed, or get sturdy cardboard boxes of an appropriate size. A computer program can be handy but not essential. The essential thing is to know where everything is.

Two home files
You should keep two home files, in addition to your safe deposit box at the bank. These two files are your active file and your dead storage file.

Your active file will hold:

  1. Unpaid bills until paid
  2. Paid bill receipts
  3. Current bank statements
  4. Current cancelled checks
  5. Income tax working papers

After three years, move these items to your dead storage file.

There are other items which should always be kept in your active file. These include:
  1. Employment records, such as resumes, recommendation letters, health benefit information
  2. Credit card information, including the number of each card, by company name
  3. Insurance policies
  4. Copies of wills
  5. Family health records
  6. Appliance manuals and warranties
  7. Education information, such as transcripts, diplomas, Student Aid Report and other financial aid information
  8. Social Security information on benefits and regulations
  9. An inventory of what's in your safe deposit box (you might store a key in the inventory folder)

Finally, keep a record book of the whereabouts of your important papers. If you use a loose-leaf binder, you will be able to change papers easily or copy a page or two. The book should contain a list of all your savings and checking accounts. This way you won't become one of the missing depositors who have forgotten their accounts or who have died without telling relatives about them. Also, include the name and branch of the bank where you keep your safe deposit box.

The book also should have all of the family members' social security numbers, and all of the insurance policy information. It's a good idea to keep a copy of your household inventory here as well. Finally, make sure someone else knows and understands the family record-keeping system.

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