The Documents You Need: Financial Back-Ups and Tax Forms

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We’re in the home stretch for the emergency preparedness documents series. The second to last items you need to prepare your financial backups and tax forms. These are relatively easy to prepare and store.

Financial Records Backup
You should backup your important financial documents at least once a month. Statements are easy to order if you lose them, but it would take days to rebuild your money management system if you lost all the data it contained.

If you use Quicken, it includes a simple back-up button. Back it up to a folder on your computer and then include it in your regular backup settings. If you manually track expenses in Excel or by some other method, then just include it in the regular backups, too. If you keep track of your expenses on paper, reconsider that. You could lose everything in a fire. It’s much better to store them on a computer.

If you use an online program like Mint or Yodlee, you’re already backed up and don’t need to worry.

If you have important financial documents like proof that you mortgage is paid off, keep those in the safe deposit box in case your bank makes an error and starts billing you again. (It happens.)

Saving Tax Forms
The good news is that the IRS can provide you with copies of your filed forms if you lose them. The bad news is that they don’t have your receipts. If you file a standard form with just a W-2, then you can keep the forms in a regular filing cabinet with your W-2s and other statements.

If you have a business, then it’s vital that you keep your receipts and other paper documentation in your emergency box, a safe, or your safe deposit box. If you had a fire and were later audited, you’d have a difficult time proving your expenses. I make copies of the receipts printed on thermal paper because they fade with time and keep them in the emergency box. You don’t want to walk into an audit with a shiny piece of blank paper as proof of an expense.

Keep your tax forms, receipts, stock trading receipts, property sale documents, and other supporting documents for at least three years.

And that’s it. These are all the documents you need to assemble and store to be prepared for an emergency. Monday I’ll finish the series with instructions on using these documents to prepare your “red file.”

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