Shredding?

[question everything]

I shred every single piece of paper with an active account number on it. Yes, even the credit card receipts with the last four digits of the credit card. And, yes, all our statements are on paper.

As we are going through old files, I found the ones from when we were self employed with bank and credit card statements associated with the business. These accounts have been closed since 2015 so I wonder whether I can get away with just tearing them and throwing to the trash.

Last month my city had a "shredding day" probably with one of these giant machines and invited residents to shred their papers. Wish I thought about it then.

[PoindexterOglethorpe]

1. You might want to hang on to those for a couple more years.

I believe the IRS can go back seven years if they decided to audit you.

[question everything]

2. Thanks. So I can get rid of pre-2013 papers?

[3Hotdogs]

3. Yes.

[progree]

5. You have to keep anything that documents the basis of your capital gains assets for

something recently sold --

e.g. you bought some stock 20 years ago and sold it this year. Your capital gains tax is based on what you sold it for minus what you paid for it. You can be asked to document what you bought it for, even if you bought it 20 years ago. The 3 year and 7 year stuff doesn't apply to that. But 7 years after the sale I don't think there is any worry.

Especially tricky is anything that involves reinvestment of dividends or other distributions -- each reinvestment is new shares of the asset with its own basis ... people who don't keep track of that end up paying capital gains taxes on the distributions they already paid taxes on.

Depreciation ... another one to look out for.

[progree]

7. Another example of something I had to keep going way way back - non-deductible IRA contributions

In the 1980's I made some non-deductible IRA contributions (because I exceeded some income thresholds or something for deductible ones). Let's say $8,000 worth.

When I started doing Roth conversions (I think it was beginning in 1999), let's say I had $92,000 in Traditional deductible IRA contributions including earnings on those and $8,000 of non-deductible IRA contributions, for a total of $100,000 in traditional IRA assets.

If I converted $10,000 of that to a Roth IRA in some year, normally I pay taxes on the entire $10,000 at my ordinary rate. But because 8% of my traditional IRA holdings come from non-deductible contributions, I don't have to pay taxes on 8% of what I converted. Just on 92% of what I converted.

Each year after a Roth conversion, I (via Form 8606) keep track of how much of my non-deducible IRA contribution is left to use. (so the percentage dwindles each year)

Anyway, my tax guy asked me to bring in my Form 8606's from the 1980's (Form 8606 is where you declare non-deductible IRA contributions IIRC), as there was no other proof anywhere that $8,000 in non-deductible contributions had been made. Potentially, over the long run, saving me paying taxes on $8,000 at my ordinary tax rate.

In short, the meme that one can throw away everything after 7 years is correct, until it isn't.

[question everything]

10. I pretty much keep all the tax returns - the forms, not supporting documentd - from the 80s..

[progree]

11. Yup, that should be good enough for something like this (non-deduct contribs), but unfortunately

there's no tax form that documents what I paid for something (e.g. shares of stocks or mutual funds) at the time I bought it. Just the regular monthly or quarterly brokerage statements, and that includes shares bought through reinvested distributions.

I should add that's changed with some recent laws, e.g. beginning in 2012, brokerages kept track of the price paid for new shares as part of keeping track of the cost basis. So this only becomes an issue with pre-2012 shares. (Different asset classes have different start dates, I think 2012 is mutual fund shares IIRC).

[Wellstone ruled]

4. Shred everything or anything

that has any data on it. Yes,keep your Tax info out to seven years,just in case. BTW,those last four digits of your social is a Gold Mine for Scammers. So make sure you just plain shred all papers even Solicitations via your mail like Credit Card offers or insurance garbage.

[question everything]

6. Thanks, yes. Every credit card or cash offering with a special ID goes to the shredder

[Wellstone ruled]

8. Did a part time job in a

Call Center(Boiler Room) selling Home Services as well as Utility Connections. Your Phone number,last four digits of your Social,as well as your Address can be reverse engineered with data mining software to give anyone all your vitals. BTW,Utility Companies are the worst for data security followed by your Bank.

Never ever let a Utility or Mortgage Company allow them to do a referral for more services. When those referrals hit my display,I had all vitals one needs to raise holy hell with your Bank accounts or Credit Cards. Never never never.

[question everything]

9. "referral for more services?" what kind?

For most of our working years, I was very careful to have the mortgage and the regular checking accounts at two different banks.

Whenever we closed on a house, the mortgage agreements included asking me to provide my checking account number with them and if not, to open an account. I promptly crossed that paragraph.

[Wellstone ruled]

12. Here you go.

Cable TV,Satellite TV,Direct Line Phone Service,Internet via Phone Line or Satellite,Appliance or Furniture Rentals,Home owners Insurance,Appliance Repair Insurance,Lawn Care Services,Pest and Weed Control Services. Banking services,BTW,never a Credit Union because their Customer recruiting is straight up and do not use second or third parties for referrals.

You name it,I know I had a Referral app some where in my system. Oh,did I say,your vitals carry across every new window or app I tagged onto.

Do wish folks would watch the sources of their junk mail,going out on a limb here,read the boiler plate on those so called solicitations and where it says,to stop these solicitations please go to the web site listed and fill out the do not send me your junk again. I takes up to ninety days to completely kill off most of your junk mail.