Should I file bank statements into the tax section or into a month folder? Sometimes it’s hard to know where the right place is in your filing system for certain documents like paper bank statements.
Should I file bank statements into the tax section or into a month folder?
Whether you use the FreedomFiler system or DIY your own file labels, you can save time by filing paper bank statements the same way every month, and doing it right away instead of letting them pile up.
Are Bank Statement Tax Records?
Personal banking statements, unless required for tax purposes, may be filed into a monthly folder. For most households, monthly checking and savings account bank statements are not tax records. While you may cross-reference those statements with your receipts, the receipts are the tax records accepted but the IRS.
In the FreedomFiler system, the light-blue Tax section is for accumulating all documents that you will need to refer to when filling out your tax return OR any documents that you need as proof to the IRS of your tax deductions and income. These may include end-of-year statements, or any personal account statements if necessary to justify your tax return. As an added safeguard, you may deliberately file all your bank statements with your tax documents, thus retaining them for ten years.
Should I File Bank Statements?
If you never look at your paper bank statements, you should opt for electronic statements only. There’s no reason to build up clutter if the statements aren’t useful.
However, banks only keep electronic statements for a few months, usually between six months-two years. Check with your bank on their policy. You may need to keep records for longer than they do, such as in a child custody situation or for a business you run. In those and many other cases, you may want to keep paper copies of your bank statements, but you can file them in monthly or even annual file folders and store them in a file cabinet or file box. They are not tax records, per se.
If you’d like to make your filing easier and color-coded, Order FreedomFiler now.
If you’d like to start with a set of simple filing categories, start here.
* While FreedomFiler® provides a method of automatic purging which eliminates the need to review files, you must ultimately decide which documents are kept two years, ten years, or indefinitely. FreedomFiler® and HeartWork Organizing is not liable under any circumstances for claims of loss or damage arising from suggested document retention guidelines. Consult a professional advisor to determine your specific document retention needs and adapt your system accordingly.
