What documents do I need to keep on file?

Clients are often confused as to what documents to keep in their files. Records relating to tax and legal matters, healthcare issues, assets, and liabilities, as well as other important transactions should be kept in case they are needed in the future.

In this checklist, we cover a number of documents that your clients need to consider keeping in case they encounter any number of issues, including:

• Various tax documents, including past tax returns as well as documents related to specific transactions, such as annual gifts made to children, relatives, or others.

• Healthcare records, including those relating to Medicare eligibility, substantiating medical deductions on prior tax returns, and confirming any contributions to, and distributions from, a health savings account (HSA).

• Various legal documents, including proof of your client’s citizenship or military service, estate planning instruments (e.g., Will, Trust, and Powers of Attorney), and records surrounding their marriage or their divorce.

• Documentation regarding certain assets owned and debts incurred by your clients, including statements and disclosures for investment accounts and employer-sponsored retirement accounts, business records (e.g., the company EIN and documents of formation and operation), student loan and mortgage statements, and titles to automobiles and real estate, among others.

• Other types of documents such as copies of any insurance policies and relevant paperwork, employment contracts, and proof of professional certifications that clients may hold.

This is a comprehensive checklist of the types of documents that clients need to consider retaining in their files.

Transcript:

Hi, Todd Pouliot, Gateway Financial, www.mygatewaymoney.com to get a hold of us and we appreciate you coming back for another checklist today. Our checklist today is, “What Documents Do I Keep On File?” Well, clients are often confused on what documents to keep in their files. Records relating to tax, legal matters, health care issues, assets and liabilities, as well as other important transactions should be kept in case they're needed in the future. On this checklist we'll cover a number of documents we need to keep in case they encounter issues including various tax documents, health care records, various legal documents, documentation regarding certain assets, and other types of documents including insurance policies, relevant insurance paperwork, employment contracts, professional certifications that any clients may hold. So, we're going to share our screen as we always do for you. And, here we are on the checklist. So, this checklist includes tax documents. Are you filing income tax returns? So typically, the holding is for three years on federal returns. You want to make sure you have all the documentation to support that return as well. What's nice is a lot of accountants are getting into the digital age and are uploading those into a kind of a client vault where you can keep those stored for several years if you continue to use the same CPA over and over again. There are some different things but one of the things you want to look at is these W-2s. Keep all W-2s until you begin collecting social security. Reason is, you want to make sure that your social security is calculated correctly. We have seen errors on that so make sure you are logging into your social security account at ssa.gov to verify those and make sure that they are up to date. Also, if you're claiming any loss for worthless securities or bad debt, keep those records for seven years. So, a little extension on that three-year. I don't know why, but I seem to keep all my tax returns in one stored file and we have those for several years. So, make sure those tax documents or very important documents just in case you have an audit or need to refile an old return. Health care documents. Will you apply for Medicaid? Keep financial statements and records for the previous five years. That is a newer law, it's been around for a few years. And, there is some some legislation that might increase that longer than five years so make sure you do keep up to date for Medicaid. And, health savings accounts. One of my favorite things to talk about are health savings accounts. Keep all medical receipts from the date the HSA was opened. I like to tell people not to use their HSA for medical until they get later on into retirement. And, you can utilize all those medical receipts once you do retire or get near retirement and utilize that. So, you want to help that HSA not only through contributions and investments, but let that time advantage. So, triple tax savings on HSA is very important. And, do you write off medical expenses on your tax return? As long as you keep your tax returns and that supporting document that we spoke about above, you should be fine. And, if you're on Medicare, keep your Medicare summary notices for at least a year until your bill is paid in full. And also, if you're enrolled in an employer drug plan, keep this notice of credible coverage provided by your employer. This is needed if you want to enroll in part D at a later time. So, that's very important with Medicare there. Legal documents. Are you a U.S. citizen? Social security card, birth certificate, and passports, obviously keep those. And, do you have an estate plan? Keep a copy of your will, trust, power of attorney, living will, beneficiary designations on file and store the originals in a safe place. Also, give copies to the people that play an important role. A lot of times we have clients come in they don't know what the will says and the trust says. It's good to know that before it's too late just in case you do have any questions. And, one of the nice things that we do here at Gateway Financial is we have a vault for all of our clients that they can upload all those important documents into that vault into bank level security and keep those documents in a secondary place. So, not just having the originals but also have a secondary backup copy just in case. God forbid something happens to you and your spouse and nobody has access to those documents or knows where to look for them they contact us and we have those documents available for them. Are you married? Marriage certificate, keep that on file. Again, that's something you can load into your vault and keep in that vault forever. Also, any prenup agreements safe and stored. Divorce decrees, I cannot tell you how many times I'll have somebody come in with a very old dated and tattered divorce decree we just scan and put that into that vault for them. Military records – discharge papers for eligibility for veteran benefits. And, any safe deposit box. I did a great one-on-one with the author of a book, In Case You Get Hit By A Bus and we talked a lot about safety deposit boxes and the pros and cons of those. It's a very good book to go read. And, it's not a book that you just read cover to cover. You read, you take action, read, take action and it talks a lot about safety deposit box and the pros and cons of those. Aright, now we get into some real deep stuff, asset and debt related documents. Do you have any investment accounts or bank accounts? Hopefully, you do. Keep the most current statement on file. I know for us we store years and years of statements for our clients and end of year statements until you complete your tax return. And, do you maintain any retirement accounts? Very similar here. Keep documentation of any contribution and withdrawals. And also, just for the coronavirus distributions, make sure you have that with your tax accountant, the 1099 R. And, Roth conversions, keep records showing those conversions. Again, if you're working with a great custodian like we do, we always have those records available. And, here's the one that we usually see a hiccup on with new clients. If you made a non-deductible traditional IRA contribution, yes, they do happen, non-deductible IRA contributions. Form 8606, and keep that until the account is fully withdrawn to track the cost basis. If you're not continuing to work with the CPA you've always worked with that they don't have that tracking, make sure you have the data. We see that happen quite a few times. Small business owners. Your EIN obviously, that's the most important one, your social security number for your business. Payroll records, employment tax records, asset records, and employee benefits such as retirement plan documents. Now, on to debts. Student loans and mortgages. Keep the loan documents until the loan is paid off and once the loan is paid off keep documentation on providing – approving that the loan has been paid in full. Read articles every now and then about how that can become a hiccup for people where the banks can come back and say the mortgage was not paid in full. Hopefully, you do have the documentation that it was. Property on automobiles and real estate – deeds, title, settlement statements, bill of sale – until you sell the property and showing the purchase-related fees that were capitalized on file until you decide to sell the property. Self-employment regarding your home office expenses – keep all those such as utility bills, and mortgage statements to prove the home office deduction. Again, that relates to that tax part that we talked about first. And, any improvements to your home? Keep those receipts until they may be used to substantiate any adjustments in the cost basis of your property. Do you own any real property in multiple states? Again, those detailed records and travel itineraries. It's important you're concerned about your state income tax liability or establishing residency. So, being that we're from Ohio, we see a lot of snowbirds back and forth to Florida. We want to make sure that we establish the proper residency in the proper state for tax purposes. And, other documents you should keep on file; your college and certifications help you prove that you've completed the coursework, insurance policies, homeowners, disability, and life insurance. Keep the most current policies on file. Again, that's where that vault comes into play for our clients. You can upload those in and make sure that they are always there for you just in case you should need them. And, if you're currently employed, any contracts that you sign with your employer including non-solicit or non-compete agreements. So, we appreciate you coming back today. Kind of a quick checklist here on important documents that we should keep on file. But much appreciate you guys hitting that thumbs up. Many many thanks to our subscribers and we appreciate you ringing that bell to keep updated on those notices. Feel free to visit us at mygatewaymoney.com and make sure you have somewhere to store those important documents for the future. Thanks, and have a great day.