Important Documents Taxpayers Need to Preserve for Financial Stability

By October 1, 2020 No Comments

Accurate Tax & Bookkeeping Services, an accountant in Brandon, FL, offers tax preparation and planning, accounting and bookkeeping, payroll, and representation in IRS/State matters throughout the Tampa Bay area. The mission is to help clients achieve the success they deserve by providing personalized attention and a sustained commitment to the best service. Accurate Tax & Bookkeeping Services emphasizes timeliness, thoroughness, and accuracy. In the effort to serve their clientele, the professionals at Accurate Tax & Bookkeeping Services are offering important tips on what documents need to be retained, as well as practical and affordable ways to safely, securely, and affordably store the documents.

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When it comes to document retention and storage, people often encounter issues in their attempts at record keeping. Ink on receipts fade away. Photocopies stick together and cannot be read when pulled apart. Mold and mice destroy the contents of file boxes in the attic. These frustrations are all too common.

What Documents Need to Be Retained?

Listed below are some of the documents that need to be kept by individuals and businesses for legal and tax purposes for at least several years. Some of these documents need to be retained for a lifetime and beyond. If an item is not on this list, but there is some concern that it might need to be retained, then add it to the list and save it.

  • Receipts
  • Home improvement records
  • Medical bills
  • Paycheck stubs
  • Utility bills
  • Credit card statements
  • Investment and real estate records
  • Bank statements
  • Tax returns
  • Records of loans that have been paid off
  • Active contracts
  • Insurance documents
  • Property records
  • Stock certificates
  • Marriage license
  • Birth certificates
  • Wills
  • Adoption papers
  • Death certificates
  • Records of paid mortgages

Seasonal Threats to Important Documents

Hurricane season in Florida and along the Atlantic coast extends from June to November, but hurricanes and tropical storms are not limited to these months. According to one source, Tampa is affected by a hurricane every two years. A major weather event occurs about every decade.

Massive flooding and extensive wind and water damage are associated with a hurricane or tropical storm. Financial documents stored onsite at a business or home may be safe inside the container in which they are stored, but if the home or business is completely destroyed by a storm surge, flooding, high winds, a tornado, or fire, the container itself could be damaged, lost, or stolen. If the container is lost or stolen, the documents could be very well preserved for whoever finds the documents. Hopefully, the finder would be honest enough to return the documents to the rightful owner.

Storing documents in a fireproof safe is far superior to a simple file cabinet, lockbox, or corrugated container. Fireproof safes do have upper limits on how long they can actually preserve documents. A very hot fire can compromise a fireproof safe relatively quickly. Exposure to high heat over an extended period can also degrade the structural integrity of a fire safe. Thirty years of documents can fill more than a few fireproof containers. The affordability and efficiency of this means of storage are limited.

Other Storage Options

Other storage options are available for the individual or small business. Important documents can be scanned and stored on a large capacity thumb drive which can then be safely stored in a fireproof safe or in a safe deposit box. Periodic updates require some logistical inconvenience with monthly or quarterly trips to the bank. This method is very inexpensive, though somewhat inconvenient and time-consuming. It is a simple solution that works, though it is not fail-proof, since the thumb drive could be lost or become damaged.

Another storage option would be a cloud-based solution. A search of the internet turns up many credible cloud-based storage solutions with thousands of reviews and a track record spanning many years. Coordination with an attorney, accountant, or authorized person along with secure passwords and two-factor authentication all but guarantee the security of the information. Nothing short of a collapse of the worldwide web could thwart the integrity of this solution.

For peace of mind, backing up files to an external hard drive, which could then be stored in a safe deposit box, would provide a failsafe solution. There would be a lag of current documents between backups. However, the delay need not be more than six months. In the interim, any legal documents could be stored onsite in a fireproof safe, transported to a safe deposit box at a bank, or scanned and stored on a thumb drive, which itself would be stored in a secure location onsite or offsite.

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The cloud-based solution provides immediate storage, and extra storage space is inexpensive. Consulting with an accountant or IT management solutions provider for storage strategies is advisable. These professionals will have the inside knowledge on what is the simplest and most affordable avenue for the typical situation.

For more information about personal finances and tax preparation, visit the Accurate Tax & Bookkeeping Service website at brandonaccountant.com. Contact the office by phone at (813) 655-9702.

Greg Menia

About Greg Menia