Lightening Your Load of Financial Documents
Moving is a stressful time, but it is also a great opportunity to lighten your load, both figuratively and mentally. While you are cleaning your closets and donating or discarding used clothing and belongings, why not take a look at your financial closet and dispose of paperwork. According to the IRS, in most cases you only need to keep three years of personal tax returns. Any paperwork that you have used to establish your income or deductibles should also be maintained for three years.
If you are a small business owner, in addition to your personal financial information, you also need to consider your business’s financial records. Like your personal finances, in most cases you only need to maintain three years of tax returns along with all necessary backup, including financial statements, stock issues or losses, proof of asset purchases or disposals. If you have claimed a loss, either worthless securities or bad debt collection, you will need to retain these records for seven years. If you have employees in your company, you will need to maintain all employment records for at least four years.
Many communities offer free shredding services several times a year. If your community offers this service, why not take advantage of it and safely destroy any records you no longer need? As you are planning your move, your tax returns and your company’s paperwork are some of the documents you should consider taking with you rather than sending on the moving company’s truck.
If your business moves to a new location after you filed your return, you should give the IRS clear and concise notification of your change of address. The notification may be written, electronic or oral. Send written notification to the Internal Revenue Service Center that serves your old address. You can use IRS Form 8822, Change of Address. In this notification, you should include the Social Security number of everyone included in your filing or the EIN number for your company.
Other personal paperwork you should consider taking with you rather than sending on the truck are deeds, wills, loans—including the mortgage paperwork, both for your old and new homes—bills of sale that help establish the value of the home you are selling, and banking and investment papers. Consider taking advantage of electronic storage and have a backup of these stored on a thumb drive. Unless you know the security level of the cloud storage you are using, you should consider storing personal financial data elsewhere.
If you have items of extraordinary value you should also take advantage of today’s electronic storage options. Take a picture of the item with either the bill of sale or an appraisal with it, and save it to a portable storage device (like a thumb drive). If you mover allows you to declare high value items (more than $100 per pound), you will be better able to establish value for the declaration. And should the worst occur and the item is lost or damaged, you will also have the ability to establish its pre-move value.