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I'm super late to this thread, but I've done a deep dive into this area and I'm happy to share what I do. * First, I am about 99.9% paperless. Anything older t
by rabboRubble 7y ago
I'm super late to this thread, but I've done a deep dive into this area and I'm happy to share what I do.
* First, I am about 99.9% paperless. Anything older than prior year is electronic. Some current year documentation is not yet scanned, but will be during the tax prep season
* Second, backups. Follow the rule of three. One offsite (crashplan), two onsite (main computer + storage device), three different file systems (whatever crashplan uses, OSX, Netgear / USB). I test my offsite recovery monthly with a sample selection.
* Three, I have a single precise location on computer with directories for each tax year.
* Four, I have subdirectories under each tax year that have a consistent retention requirement. 1 year after filing, 3 years, 5 years (FBAR), 7 years, until my retirement so +30 years, and until my death so +50 years, and active meaning do-not-delete until the tax event closes whereupon the retention period can be set. So like US bank statements that have a 1099, statements go into directory A with a 1 year retention. 1099s go into a different directory with a 3 year retention. A purchase of a new stock, the confirmation for that transaction would go under "active" meaning there is no deletion date, and that confirm would stay under "active" until the stock position was sold. At time of sale, that data is refiled into the correct tax year, where the appropriate retention period is applied to the info.
* Five, I use an application called TagSpaces, create a date specific retention framework, then tag each sub-directory from steps three and four with a destruction date. So tag "2019-12-31-7yr" was applied I think to tax year 2011. This past new year, I checked all objects tagged "2019-12-31-7yr", made sure nothing was misfiled under the tag, and then delete the object. Eventually a specific tax year will only have things intended to keep until retirement and until my death.