MAKING CENTS: Don’t let your trash become someone else’s treasure

In this technologically influenced world, we hear a lot cloud computing and a paperless world. I don’t know about you, but the piles of paper still seem to be there and the only way to manage that growing pile is to have a great filing and disposal system. Both the storage and disposal parts leave you vulnerable to criminals looking to steal your money and

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identity.

In terms of filing and storage, make sure that your filing cabinets are locked and as secure as you can possibly make them. You may even consider scanning in your important documents into a secure, encrypted storage medium and keep your originals in an offsite secure storage facility.

More common than people breaking into your house for confidential information are the dumpster divers who steal your confidential information from the trash. Whether it is an old tax return, a copy of your W-2 or simply an insignificant document that may contain your signature, how long should you save these things and how to you properly dispose of these?

In terms of document retention, there clearly are some documents that you’d like to have around for a period of time. Starting with tax records, you only need to keep three years on hand. Most tax professionals however, would suggest that you hold onto these for 7 years. The tax documents that should be saved are the actual forms filed along with the supporting forms like W-2s and 1099s. But you also need to keep your back up for deductions or any other positions that you’ve taken on your tax return. This may include cancelled checks, bank statements, or invoices for deductible items.

Home improvement records should be kept until three to seven 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 back up for improvements made in the past, start now with a list of the improvements that you’ve made to back up your basis calculation. Also retain any copies of your deed, closing documents and any mortgage information from the closing until 7 years after you sell.

Maintain copies of all insurance policies in force. Last year’s auto policy can be destroyed when the new one is issued, but your policies for life, disability or long term care should be retained as long as they are in force.

For investment statements and supporting trade tickets or performance reports, retain the monthly statements until you receive the year end statement and are sure that everything is accurate. Make sure that these statements show your cost basis for all holdings, then retain up to seven year end statements electronically or in hard copy.

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 disposal company who will give you a certificate of disposal.

John P. Napolitano is CEO of U.S. Wealth Management in Braintree, Mass., and 2012 president of the Financial Planning Association of Massachusetts. He may be reached at jnap@uswealthmanagement.com or on Facebook as JohnPNapolitano and US Wealth

John Napolitano is a registered principal with and securities offered through LPL Financial. Member FINRA/SIPC. He can be reached at 781-849-9200.
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