Health, accident and auto insurance information, and information on
allergies, health problems and blood type should also be carried
with you.
Other records require a different
approach, but the approach does not need to be difficult. Use NDSU
Extension Service circular HE 446, "Inventory of Important Family
Records," as a guide for what type of records to keep, and then as a
record of where these records can be found.
The easiest way to keep track of your
family papers and business records is to set up a filing system. A
place to store file folders is more important than a fancy desk. A
metal filing cabinet, an under-bed storage chest or cardboard box,
or an accordion folder will do the job as well as a desk drawer.
Gather your important papers from
throughout the house. Divide your file folders into three major
areas:
Current financial records
Inactive financial records
Permanent records
The current files should
include employment records, credit card information, insurance
policies, family health records, warranties and guarantees,
education records, bank statements, a household inventory, tax
records and canceled checks. These headings may be used as a basis
for your filing system.
The inactive files are used to
store the items from the current files that are three years old. Go
through the current files once a year. Discard unneeded items and
transfer others to inactive storage. A good time to make transfers
is the first of the year, when you work on your income tax forms.
File headings would be the same as for current files.
Permanent records are Very
Important Papers, ones which should be kept safe -- in
a safe deposit box or in a fireproof (and waterproof) storage
container.
Every family's file folder labels
will be different. Divide each area into categories that make sense
to you. Circular EC-510, "A Farm and Home Filing System for North
Dakota Farm Families," may help you get organized. Feel free to add
to or change your file labels to better meet your family's changing
needs.
A good record keeping system will
allow someone who is unfamiliar with the system to locate important
documents, maintain records and prepare reports in case of an
emergency.
Very Important Papers include:
- Papers or records that prove
ownership (such as real estate deeds, automobile titles and stock
and bond certificates)
- Birth, marriage and death
certificates
- Legal papers (such as divorce and
property settlement papers)
- Contracts
- Household inventory
- Wills
- Advance Directives such as Living
Wills or Durable Powers of Attorney for Health Care
- Anything else that would be
expensive or difficult to replace.
Where Should VIPs Be Stored?
A safe deposit box in a financial
institution or a home fireproof safe is the best place for your
family's VlPs. Papers that cannot be replaced or would be costly or
troublesome to replace belong in this type of storage. In general,
bank account registers, canceled checks, transcripts, medical
histories, employment records, tax returns and insurance policies do
not need to be kept in a safe deposit box or fireproof home storage.
How Long Should One Keep Tax Records?
The Internal Revenue Service (IRS)
has a three year statute of limitations on auditing a return. Keep
all records of income or deduction expense for three years. However,
if you use the income averaging option, you may need to prove your
taxable income for four base years and if you failed to
report more than 25 percent of your gross income, the government
will have six years to collect the tax or start legal proceedings.
Filing a fraudulent return or failing to file a return eliminates
any statute of limitations for an audit by the IRS. If you hire a
tax specialist, check to see how many years you should keep your
records.
Keep records that show the original
cost or value of your property. Also keep a record of home
improvement costs to reduce capital gains tax if your home, land or
property is ever sold for more than its original cost or value.
All canceled checks are not needed to
support tax deductions. Save only those checks that substantiate an
income tax deduction, such as checks paying for medical/dental
expenses or charitable contributions. Putting a "T" for "tax" in the
memo blank of a check when you write it might help you sort canceled
checks faster. In cases where your only record is a duplicate check,
you may need the monthly checking account statement to verify that
the check went through.
Keep a copy of filed tax returns.
Should you need it, a prior tax return copy can be obtained from the
IRS center where you filed your return. Complete form 4506, Request
for a Copy of Your Tax Form, and pay the fee ($23.00 in 1998). From
North Dakota, mail the request to the IRS, Photocopy Unit, PO Box
9941, Ogden, UT 84409. If you have moved to North Dakota, request
the copy from the IRS center in which you filed the return you want
copied. IRS center addresses are listed in most IRS publications.
What To Keep Where and For How Long?
Records are kept in four places: in a
home filing system; in a safe deposit box or fireproof home storage;
in the wallets and billfolds of household members; and in each
vehicle owned (refer to the
Guide for Family Records).
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