Welcome to FreedomFiler®

Quick Start Guide

Label Guide

Questions & Answers

Overview of FreedomFiler® colors

Review the contents of your kitStep 1

Category

Active

Monthly

Tax

Permanent

Remove/Replace

Archive

Resource

What To File

papers requiring action, such as bills to pay

paid bills, account statements, petty receipts

any documents you expect to use for taxes

vital historical records for family and property

policies, legal and up-to-date personal files

completed tax returns and all supporting documents

literature including articles, notes, brochures etc.

How Long Papers Are Kept

until acted upon (afterwards papers may be filed into a category below)

24 month rotating cycle (documents are automatically discarded as folders are reused**)

after taxes, all documents are placed into the Archive

kept for a lifetime or forever (or until property is sold) kept until replaced by a newer version (papers may be re-filed to keep for additional time**)

10 year rotating cycle (actual tax forms may be kept indefinitely**)

partition and rotate files as needed

Five picture reference cards with pop-up tabs

show you how to use your FreedomFiler® at a glance.

The Premium Set, shown above, includes twenty-one label sheets for use with 1/5 cut hanging file tabs, plus eight label sheets for use with 1/3 cut interior folders. The Deluxe Edition includes fourteen 1/5 cut label sheets (does not include optional 1/3 cut sheets shown top).

Quick Start Guide Label Guide

Questions & Answers

Quick Start GuideCongratulations on your new FreedomFiler® home filing system! Once you begin using your FreedomFiler®, you will be forever free from the burden of cleaning out and reorganizing files!* To achieve a truly maintenance-free system, FreedomFiler® organizes all papers that do not require immediate action into permanent, replaceable, and rotating files as shown below. You may adapt the example system in this Quick Start Guide to keep papers as long as you need.

**For document retention guidelines and further options, see Questions & Answers section on page 12

*See p.15 for disclaimers and limitations.

2

Gather all the supplies you will need

Step 2

Choose a method for applying folder labels that works best for you

Step 3

A. Inside Holding open a file tab with your thumb, slide the label up along the inside-front with your other hand. Pinch the tab with both thumbs and then pull away your hand from inside.

B. Paper Inserts Apply the label onto the top of a paper insert and then place it inside the plastic tab.

C. Outside Apply the labels directly to the outside of a tab to reduce glare.

Use the test labels provided on label sheet 3 to practice getting labels on quickly and neatly.

Find out which labeling method suits you the best, and you’re ready to build your FreedomFiler®.

Color-coded plastic tabs may interfere with label colors. Apply FreedomFiler® labels to the outside of these tabs.

hanging folders (any size)

binder clips (optional)

paper inserts (optional)

plastic file tabs (1/5 cut)

OR

OR

Note: A minimum of 58 folders and tabs are required to build the complete household system shown in this Quick Start Guide.

3

Set up Monthly FoldersStep 4

Set up Tax FoldersStep 5

You may place Section Header labels at the right of the first folder in each section to remind you or someone else what to file.

Petty receipts, paid bills, and personal account statements that are not used for taxes (filed by month—example November EVEN YEAR)

EVEN YEAR/ODD YEAR Set up two full years of Monthly files. One is for years ending in even numbers (black top), and the other is for years ending in odd numbers (white top).

Tip: Place a binder clip onto the current month folder (or bring to front)

Income records, W2, 1099, other misc. tax related documents

Receipts for charitable donations

Medical bills (payment receipts)

Other tax deductions (see label sheets for more examples)

Duplicate Tax Tabs Always set up two identical tabs for each Tax category (One EVEN YEAR and one ODD YEAR) This will prevent tax documents for two different years from getting mixed up after the New Year!

Rows of 4 tabs recommended

General Note: Choose labels according to your own personal needs. For help selecting labels, follow the guides provided directly on your label sheets. For further questions refer to your Label Guide or Questions & Answers on the following pages. You may handwrite onto labels or print using any word processor. Visit www.freedomfiler.com for printing templates.

EXAMPLE EVEN YEAR

EXAMPLE ODD YEAR

EXAMPLE EVEN YEAR

EXAMPLE ODD YEAR

4

Set up Permanent FoldersStep 6

Set up Remove/Replace FoldersStep 7

Employment contract and benefits package*

Mortgage or Rental agreement. The blue sticker reminds you to re-file any prior mortgage agreement in the tax section if you refinance.*

Service provider contracts, benefits, rates and support (utilities, telephone, TV, internet etc.)*

Wills, trusts, power of attorney, and legal declarations*

Health insurance policy, addenda, declarations, application form*

Association and club policies, rosters, schedules, and newsletters*

Auto insurance policy, addenda, declarations, application form*

Homeowner’s or renter’s insurance policy. The blue sticker reminds you to re-file expired homeowner’s policies in the Tax section to keep for ten years.*

Documents useful for the resale of your home—deed, closing documents, improvement records

Create a separate file folder for each individual family member’s health and education records. You may set up more than one folder to hold auto, home, and warranty records— simply divide each file into subcategories using examples provided on label sheet 4-1H and 4-2H.

Savings bonds, legacy stock receipts not on record with your broker. (See Label Guide p.9)

Important product warranties and manuals along with receipts (oversized manuals belong on a shelf or nearby the product)

Copies of family certificates & useful items in an evacuation (originals may be kept in a safe deposit box)

Lab results, medical conditions, prescriptions taken, and treatments received

Documents useful for the resale of your car or truck such as the title and service records.

Grade reports, credentials, evaluations, and academic achievement awards

Family trees, biographies, and ancestor history

EXAMPLE

Some replaceable items—mortgage agreements and insurance policies—should not be discarded, but kept in the Tax section when they expire. Apply the blue stickers from label sheet 2-3H to the Mortgage/Rental and Insurance, Home labels to remind you to re-file the documents in the Tax section when they are replaced*.

EXAMPLE

*For document retention guidelines, refer to Questions & Answers on page 12 or consult a professional advisor.

5

EXAMPLE

Set up Active Folders (optional)Step 10You may file Active papers according to the day of month you plan to take action. Ex: during the first eight days of the month

File papers that you plan to work on next month here.

OR, You may file Active papers according to the type of action required. See sheet 7-1H for examples.

Tip: Use a binder clip to mark the current day of month (or bring to front)

Set up Resource Folders (optional)Step 9You may use Resource files for saving literature such as magazine clippings, notes, brochures, saved projects etc. Choose subject names that interest you. Ex: Travel/Vacation

Set up Archive FoldersStep 8Completed tax returns and supporting documents filed by year. Ex: tax year ending in “5”

The Archive for taxes is a revolving system so you always have a folder waiting for the filing of next year’s tax return. The ten folders are numbered according to the last digit of the tax year. This provides a cycle that lasts a full decade. For example, the folder labeled Tax Year 0 is reused by tax returns for years 2000, 2010, 2020, 2030, and so on.

Instead of creating Resource files, you may keep literature that you plan to read with your Active files. After you have finished reading an article, discard or re-file it into the Monthly section.

Papers requiring action or follow-up may be stored in a desktop organizer. Refer to your Active/Resource index card to see an example.

EXAMPLE

EXAMPLE

Tip: Use a binder clip to mark the last tax year filed. Advance the clip to the next year when you’re ready to file your taxes.

6

Arrange folders using as many filing cabinets or boxes as you need

Step 12

Begin filing papers!Step 13To begin filing, simply refer to the indexed picture cards kept inside your filing drawer. Check these cards for helpful tips at the first change of month, on New Year’s, and at tax time. Do not wait to clean out your pre-existing files to begin using your system. You may set aside older files and transfer papers in small batches or as needed. Pre-existing files which are inactive may be put in storage until they are transferred, or they can be discarded after the passing of time.

Follow the “Example” picture card included with your kit. To make filing easier, place frequently used files toward the front of your filing system. Be sure to insert any extra plastic tabs into unused folders. Stow extra folders in the back of your drawer so they are available as your system expands.

Use Interior Folders (optional) Step 11If you purchased the Premium Set or the 1/3 Size Expansion Kit, you may use interior folders (or clear project files) to sub-divide hanging file folders into specific topics. Alternatively you may use a series of hanging files instead of interior files. See Questions & Answers on page 12 for further guidelines.

Handwrite or print onto blank 1/3 size labels using any ink

jet or laser printer. For help printing

visit FreedomFiler® on the Web.

Place indexed picture cards inside a folder at the front or back of your filing system, according to your preference. You may also set up folders for storing your instructions and blank labels (see special labels provided at the top of label sheet 3).

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Label Guide

Use

“catch all” for any tax-related documents (use just this folder if your tax deductions are few)

records of income, W2, 1099, 1098, K1 etc., annual gain/loss summaries, income from sale of home or property, all year-end statements from investments or loans

if applicable, set up a folder for each category of tax deductible expenses (see label sheet 2-1H for categories you might use)

personal bank statements, deposits/withdrawals, cancelled checks, notices (use this folder only if you rely on your bank statements or deposit slips to support your taxes, otherwise file in Monthly or Bank Statements)

personal credit card statements, reconciled receipts, notices (use this folder if you rely on your credit card statements to support your taxes, otherwise file in Monthly or Credit Card)

business banking statements or records of income (e.g. deposit slips, invoices)

business credit card statements, reconciled receipts, notifications (use this label if you rely on your business credit card statements to determine your expenses, otherwise file in Monthly or Credit Card)

receipts for any business related expenses (see label sheet 2-2H for detailed categories that may be used to begin a new section)

records of rental or royalty income

receipts for expenses related to rental property or royalties (see label sheet 2-3H for detailed categories that may be used to begin a new section)

business related expenses which your employer will not reimburse (see label sheet 2-1H for detailed categories that may be used to begin a new section)

Use

month folders are recommended for filing items that are not tax-related which may include paid bills, monthly statements, petty receipts, and any other miscellaneous items that do not have a home (note: if you prefer to keep monthly statements separated by account, you may use any of the labels listed below)

if not used for taxes: personal bank statements, ATM/withdrawal receipts, deposit slips, cancelled checks, notices (or file by month—note: file business bank statements in Business Banking)

if not used for taxes: personal credit card statements, reconciled receipts, notices (or file by month)

monthly statements and notices for brokerage, money market, or mutual fund accounts (or file by month—note: file 1099 and year-end statements in Income W2/1099 Misc., and file any legacy stock purchase receipts that are not on record with your broker in Investments Owned)

monthly statements for loans and leases (or file by month—note: file 1098 in Income W2/1099 Misc.)

monthly statements for mortgage (or file by month—note: file 1098 in Income W2/1099 Misc.)

monthly/quarterly statements for retirement accounts (401K, pensions), trade confirmations, notices (or file by month—note: file 1099 and year-end statements in Income W2/1099 Misc., and file retirement plan agreements in Retirement Plan)

paid bills, notices (or file by month—note: you may file contracts, rates and service information in Service Providers or file according to the type of service using labels provided on sheet 5-1H)

a place for petty receipts if you do not use month folders (e.g. groceries, supplies etc.)

Tax Labels*

Tax Documents

Income W2/1099 Misc.

Deductions (By Category)

Bank Statements

Credit Card

Business Bank/Income

Business Credit Card

Business Expenses (Also By Category)

Rent/Royalties Rcvd.

Rent/Royalty Expens. (Also By Category)

Unreimbursed Expen. (Also By Category)

Monthly Labels*

January thru December (By Month)

Bank Statements

Credit Card

Investment Account

Loan/Lease Payments

Mortgage Statements

Retirement Account

Utilities

Receipts (Also A-Z)

Archive Labels*

Tax Year 0..9

Tax Decades 0..99

Use

tax returns and supporting documents for the last ten years (also any expired policies, contracts, and agreements to be retained for ten years or more)

if needed, actual tax forms such as 1040, W2, 1099 etc. to be kept beyond ten years (also any expired agreements that must be kept for more than ten years in case of extended statutes of limitations—see Questions & Answers for document retention guidelines)

8

*Label titles are shown here in the order in which they appear on the label sheets (top to bottom, left to right) and then alphabetically.

Permanent Labels

Auto Records

Career History**

Collectibles**

Dental Records**

Education Records**

Family History**

Health Records**

Home Records

Investments Owned

Loan Payment History

Memories**

Military Service**

Pet Records

Rental Records

Vital Records**

Warranties & Manuals

Use

documents useful for the resale of your car or truck such as the title*, original papers, smog tests, service and improvement records (you may use separate folders for improvements, oil/lube, service/repair, and title/papers—see label sheet 4-1H—note: file monthly auto loan payments in Monthly )

historical resumes, past job descriptions, evaluations and past recommendation letters, career achievement awards, employment dates (note: file current resumes and most recent career profiles in Career/Resume)

receipts, appraisals, and historical information for collectibles such as art, furniture, decorative objects, stamps, cards etc. (if you are a frequent collector, consider keeping a dedicated box of index cards containing critical information for each item collected such as the date of purchase, price notes, history, seller’s contact information, where the item is stored, care & maintenance instructions, and a photograph)

dental and orthodontic exams, actual treatments received including operations and prescriptions taken (or file in Health Records—note: file dental bills and payment receipts in Health Care Expenses or Monthly)

diplomas, grade reports, transcripts, credentials, evaluations, honorary achievement awards (set up separate folders for each family member)

family trees (genealogical records), ancestor history, biographical records, published family news (you may set up separate files for each parent)

copies of immunization records*, laboratory results, charts of known conditions, actual treatments received including operations and prescriptions taken (set up separate folders for each family member—note: file medical bills and payment receipts in Health Care Expenses or Monthly)

documents useful for the resale of your home—a copy of the deed and closing statements*, appraisals, improvement & maintenance records, warranties & manuals for home fixtures and major appliances (if you sell your home, re-file records of improvement costs, the original purchase price, and the final sale price in Income W2/1099 Misc.***—note: file home loan payments in Monthly and file year-end 1098 forms in Income W2...)

copies of stock certificates and savings bonds*, prospectuses for companies in which you own shares of stock — also legacy stock receipts (trade confirmations) if the purchase price is not on record with your broker (if you sell an investment, re-file any records showing the original purchase price and sale price in Income W2/1099 Misc.*** —note: you will not need to use this file if you can verify that your broker has the original price of all your past stock purchases, and be sure to have all stock prices transferred if you switch to a new broker— for further information about filing investment papers see How do I file Investment Papers? p.12)

Optional: for keeping a record of all payments toward a loan or to a creditor—you may use this tab to document your payment history for purposes of applying for future loans (otherwise you may rely on bank statements, ten years of tax records including yearly loan payment summaries, and letters of credit which are commonly available)

personal memorabilia and keepsakes such as saved letters, tokens or photographs etc. (these items are best kept in a photo album or memorabilia box)

military service records including a copy of discharge* (form DD 214), evaluations, fitness reports, deployments/assignments, certifications, honorary awards, badges

your pet’s veterinary records including copies of immunization records*, registrations, pet show awards etc. (set up a separate folder for each pet)

if you own rental property, keep a copy of the deed and closing statements*, appraisals, improvement records (if you sell your rental property, re-file records of improvement costs, the original purchase price, and the final sale price in Income W2/1099 Misc.***—note: file loan payments in Monthly and file year-end 1098 forms in Income W2/1099 Misc.)

certificates (birth, marriage, adoption, baptismal, immigration & naturalization etc.), passports & ID, social security cards, emergency contacts, family evacuation & communications plan, vital medical prescriptions, home inventory list (or photos or video of home inventory) for insurance purposes, list of insurance policy numbers and a chart of financial accounts and service providers, important password and code hints (alarms, locks, account access etc.), list of wallet contents (photocopies), list of safe deposit box contents—also for convenience you may keep copies here of other documents which may be helpful in the event of an evacuation* (originals may be kept in a disaster-proof safe or bank safe deposit box—note: see Questions & Answers p.12 for disaster readiness guidelines)

important product warranties and manuals along with receipts (you may use separate folders for various product categories—see label sheet 4-1H—note: oversize manuals belong on a shelf or can be stowed nearby the product—file trivial warranties and manuals in Monthly)

*Consider placing a copy of the following in Vital Records: automobile titles, immunization records, property deeds & closing statements, stock certificates, savings bonds, military discharge records (note: store original copies in a secure file box or safe deposit vault).

**Consider storing in a disaster-resistant file box any Permanent files containing irreplaceable personal history or vital property records.

***Optional: Place a light-blue dot called a “Send To” on top of Permanent labels to remind you to re-file property or investment records into a Tax folder when sold. See dots on label sheets 2-3H. Also see Questions & Answers for document retention guidelines.

9

Remove/Replace Labels

Address/Phone List*

Associations/Clubs (Also By Category)

Business Licenses

Career/Resume

Child’s Files

Credit History Report

Dining/Take Out Elder Care Admin

Employment Package

Events/Birthdays List*

Financial Plan/Budget*

Household Chores

Ideas/Goals List*

Insurance, Auto/Home...**

Legal, Family**

Loans/Leases**

Mortgage/Rental

Rental Management

Retirement Plan/Annuity

Service Providers (Also By Category)

Shopping/Supply List* Social Security

Transit/Maps

Travel/Miles Programs

Travel-Packing List*

Will/Trust (Legal)**

Use

list of phone numbers etc. (consider keeping a dedicated address book or contact file)

recent association newsletter, meeting times (current schedules), policies, membership info. (note: file trivial memos and correspondence in Monthly***)

business licenses, fictitious name registration, re-seller permit, etc.

current draft of resume, career counsellor profiles, letters of recommendation (or file in Employment Package—you may re-file historical resumes in Education Records***)

children’s school & club schedules, newsletters, rosters, & policies (or file in Associations/Clubs)

recent credit reports (or file in Service Providers when using “Quick Start” system)

take out menus, regular coupons from restaurants (or file in Service Providers)

residential/day care info. for elderly, medication schedule, related contacts & support services

employment contract & benefits package, employee stock options (you may re-file previous employment packages in Monthly or Tax Documents to keep for additional time***)

list of birthdays, anniversaries and special dates (consider using a paper or electronic calendar)

budget chart, statement of financial goals and written plan (or keep with Monthly in current month)

chores list/routine, family cleaning schedule, cleaning tips, cleaning supplies info.

lists of goals and ideas (consider using a daily planner or keep with Monthly in current month)

current policy with all related addenda, most recent declarations (you may re-file previous insurance policies in Monthly or Tax Documents to keep for additional time***)

powers of attorney (granted to you by others), court orders and ongoing legal agreements: e.g. custody, alimony (or file in Will/Trust (Legal))

loan or lease agreements (e.g. auto loan/lease, educational loans—or file in Mortgage/Rental)

mortgage/rental agreement (re-file previous mortgage agreements in Tax Documents***)

property management agreements and landlord administrative files (if you own rental property)

retirement and pension plan contracts, 401K plans, annuity policies

contracts, benefits, rates & customer service info. (you may re-file previous service provider agreements in Monthly or Tax Documents to keep for additional time***)

shopping lists, regular supplies list, store information, supplies reorder catalogs (or keep list in kitchen/on fridge)

recent social security summary statement (or file in Income W2/1099 Misc.—note: file actual social security cards in Vital Records)

bus, train, trolley, shuttles etc. timetables, map of routes & parking information (or file in Service Providers)

frequent flyer miles program policies, current accumulated credits (or file in Service Providers)

packing checklists for travel

active wills, trust agreements, advance directives, powers of attorney (granted to others) LLCs etc. (if your will has been compiled into a binder by your estate planner, you may place a note in this file indicating where the binder is located and how to obtain the original copy)

*Visit www.freedomfiler.com to print free blank forms and lists.

**Consider placing important Remove/Replace files in a disaster-resistant file box in your home or bank safe deposit vault. Custody rights and powers of attorney granted to you may also be placed in Vital Records. See Questions & Answers p.12 for disaster readiness guidelines.

***Optional: Place a color-coded dot called a “Send To” on top of Remove/Replace labels to remind you in which color-coded section you need to re-file outdated papers at the time they are replaced. See dots on label sheets 1-2H, 2-3H, and 4-2H. You may use different Tax folder names to suit your needs. Also see Questions & Answers for document retention guidelines.

10

Active and Supplies Labels

papers requiring action or immediate follow-up**

ASAP Bills Paid (Last Month)

Bills To Pay

Calls/Letters Etc.

Child Follow Up

Coupons/Gift Voucher

Entry/Scan/Copy

Estimates

Events/Calendar

File Away/Offsite

Health Bills/Benefits

Legal, Unresolved

Meetings (To Discuss)

Pending

Projects

Reading

Reconcile (Receipts)

Reimbursements

To-Do

In Box (To Sort)

Out Box/Errands

Days 1-31 of Month

January thru December (By Month)

1st, 2nd, 3rd, 4th Quarter

Future

forms, mailing stationery etc.

Bank Deposit Slips

Business Forms (Various)

Fax Covers

Financial Worksheets

Greeting Cards

Mailing Supplies (Various)

Planners/To-Do Lists

Rental Applications

Stationery/Letterhead

Resource Labels

articles, clippings, flyers, brochures, notes etc*

Business Resources

Career Ideas

Child-Future Activities

Child Rearing

Clothing/Fashion

Collecting

Computer Notes

Educational Programs

Entertainment & Arts

Event Planning

Financial/Investing

Gardening

Gift Ideas

Health & Fitness

Hobbies & Crafts

Home Decorating

Home Improvement

Humor/Inspiration

Organizing

Recipes, Cooking

Recreation/Parks

Relationships & Love

Rental Resources

Sciences/Technical

Self Improvement

Shopping “I Wish”

Social Issues

Travel/Vacation

Will & Estate Planning

*Use Remove/Replace files instead of Resource files to hold any current policies, contracts, and up-to-date administrative documents. See label sheet 5-1H for examples.

**You may use labels for individual days of the month (1-31) to create a “tickler file”. A “tickler file” allows you to file any paper requiring action into a folder according to the day of month you plan to act. Set up a separate folder for each day of the month or group days together (e.g. Days 1-8, Days 9-15, Days 16-23, Days 24-31).

Optional: Place a color-coded dot called a “Send To” on top of Active labels (e.g. Bills To Pay) to remind you in which color-coded section you need to re-file papers after they have been acted upon. See dots on sheets 1-2H, 2-3H, 3, 4-2H, 5-2H, 6-2H.

11

Questions & Answers

For up-to-date answers please browse FreedomFiler’s online Q&A Forum!

Where can I get more blank labels?

Visit www.freedomfiler.com for more blank labels or ask your re-seller.

Should I use manila or color-coded interior folders?

Interior folders are not necessary but may be preferable for subdividing files or improving handling convenience. Papers can often be filed and retrieved faster by using a series of hanging folders instead of interior folders. For example, to organize car records, you may label folders as follows: Auto Improvements, Auto Oil/Lube, Auto Service & Repair, and Auto Title/Papers. See examples on label sheets 4-1H and 5-1H.

Can I get larger, 1/3 cut labels to fit interior folders?

Yes. The FreedomFiler® 1/3 Size Expansion Kit has plenty of 1/3 cut labels in every color. (1/3 cut labels are included with the Premium Set)

Why use stickers instead of paper inserts?

An individual sticker can be peeled from a sheet faster than tearing out a paper insert. Preprinted stickers remain alphabetized on a single 8.5 X 11 sheet and do not become scattered or lost. For convenient access, extra sheets are kept inside a folder in your filing system. Unlike paper inserts, blank sticker sheets can be fed through a printer many times over, printing only a few labels at a time without being destroyed. Stickers also offer the flexibility of working with any tab color.

What is the purpose of EVEN & ODD YEAR labels?

Having two identical sets of folders allows you to accumulate documents for the current year while keeping a separate back-up of all documents from last year. Two years allows you plenty of time to pay your taxes and place any supporting documents in the Archive before folders are reused. Folders can be rotated each year without having to be renamed, and there is no need to ever create new folders.

Do I need a separate filing system for my home business?

If you use a dedicated accounting system or software to categorize your business expenses throughout the year, or if you track paper records for multiple clients or employees, the FreedomFiler® Business Kit will provide materials specifically designed to optimize your business files.

How do I manage the many papers I receive from my credit card company?*

File credit card statements by month (or in a Tax folder if used for tax purposes). You may save the actual credit card agreement along with policy changes in a Remove/Replace folder (e.g. Credit Card Policy or Service Providers). Unless a specific action is required, all other notices can be immediately discarded or filed into the current month folder.

How do I organize health care bills and “Explanation of Benefits” from my insurance provider?

Health care bills and explanation of benefits receipts may be filed into an Active folder until the final bill is received (e.g. Health Bills/Benefits). Your insurance provider may pay only part of the bill, and then you will receive a final bill for the remaining amount. After paying the final bill, file all related paperwork into the Tax section (e.g. Health Care Expenses).

How do I file investment papers?

File all contracts, benefits, rates, and account access information from your investment service providers in a Remove/Replace file (e.g. Investment Services). If you are holding an actual paper stock certificate or savings bond, keep it in Vital Records (or store it in a safe deposit box with a copy in your filing system). For tax purposes, your investment broker is required to keep a record of the purchase price of all your new investments.** Keep all year-end statements such as forms 1099, or gain/loss reports with your tax files (e.g. Income W2/1099 Misc.). New monthly statements and trade confirmations can be filed by month. NOTE: for legacy stocks and funds you have purchased in the past (or from non-compliant brokers**), verify that your broker has the purchase price on file, otherwise keep individual stock purchase receipts in a permanent file until sold (e.g. Investments Owned). If you choose instead to rely on years of monthly statements as a back-up, use the Archive to organize past statements by year; however, be sure to maintain purchase dates of your current investment holdings in a table, spreadsheet, or accounting software so that you can put a destroy date (six years into the future) onto any statements older than your oldest held asset.

How can I prepare files for a natural disaster?

Be sure to visit FreedomFiler® online at www.freedomfiler.com/Prepare for detailed disaster preparedness information and links to additional resources. Adapt your disaster plan to meet your needs. As a general guideline, store original copies of important documents in a disaster-resistant file box in your home or bank safe deposit vault. Place signed wills and powers of attorney into your personal secure file box (or with your attorney) for accessibility. Keep a portable filing tote on hand to quickly transfer and evacuate any important and frequently used files. Consider having a quick reference list of all your financial accounts and service providers at a secure place on the Web or a compact sheet in your wallet (hide full account numbers and use password hints only).

Note: if documents are destroyed in a disaster, nearly all vital records can be replaced by contacting the original issuer. Visit FreedomFiler® online for instructions on replacing specific records.

What should I do with inheritance papers?*

Until the inheritance has been resolved, keep all documents in an Active file. After assets have been disbursed (probate has ended), file in a Tax folder any records showing income resulting from the inheritance along with related legal correspondence, transpired agreements, and wills that have been executed. Ongoing agreements such as trusts and LLCs should be filed in a Remove/Replace folder. All vital documents pertaining to tangible assets such as titles, deeds, stock purchase prices, bonds, and CDs belong in a Permanent file for resale purposes.

*See p.15 for limitations of liability.

**U.S. Law passed in 2008, enforced in 2011 for stocks, 2012 for funds, 2013 securities

GENERAL

12

13

Where should I file the numerous papers related to a lawsuit, claim, or family legal proceeding?*

For any outstanding legal issue, keep all related papers in an Active file until resolved. After legal proceedings conclude, file into a Tax folder evidence of any taxable gains or losses involved, if any, along with related legal correspondence and transpired agreements. If there are any continuing agreements (e.g. custody or alimony), keep these in a Remove/Replace file. Use Permanent files to store all vital records pertaining to tangible property you still own (e.g. titles, deeds, stock purchase prices, bonds, CDs). For property damage claims, keep all repair records in a Permanent file (e.g. Auto/Home/Rental). For personal injury cases, keep medical treatments with your Health Records file.

Why should I file documents by month?

This will greatly reduce the amount of energy it takes to finish your routine filing, and you will be surprised how quickly you can find any single document, often faster than if you had separate folders for each account. But remember, what matters most is how fast you can file. Over 90% of what you file may never need to be looked at again.

What if I prefer not to file bills and statements by month?

Set up a separate folder using labels provided on label sheet 1-1H, e.g. Utility Bills or file by vendor A-Z using labels provided. Beginning every other year, discard the entire contents to begin anew.*

What if I don’t have room for 24 month folders?

If you have very few papers, you may file paid bills and monthly statements into dedicated folders as described in the answer to the previous question. Alternatively, if separating your files into two or more file drawers is not an option, consider creating a rotating cycle consisting of fewer folders (label sheet 1). For example, if your tax needs are very simple (e.g. W2 only), you may only need a 6-month or 1-year cycle to keep petty transactions. Additionally, you may cluster 2-3 consecutive month tabs onto a single folder. If none of the above solutions suit you, try using a compact expanding file with slots.

Is it safe to throw away old bills and account statements in Monthly folders after two years?*

Because these items were not needed for your taxes and since you will have already filed your tax return for that year, it is generally safe to discard these papers automatically.* Two years allows adequate time to resolve any vendor disputes; however, if you would like to keep items longer than two years, use additional labels to create a new set of folders for each added year. The legal time limit for lawsuits will vary from state to state but usually ranges between 2-3 years for most claims. Keep in mind that most banks and service providers preserve your statements on file for seven years or more. If you are concerned about keeping documentation beyond two years for the purpose of applying for future loans, use a Permanent folder titled Loan Payment History for keeping a record of regular payments (see p.9 or label sheet 4-1H).

What if I receive monthly statements and bills online?

If you make payments online, you may still want to print a paper backup of your transactions. FreedomFiler’s Monthly folder labels provide a reliable, maintenance-free backup system. Paper records in your FreedomFiler® can often be accessed more quickly than downloading files from the internet. Meanwhile your entire month’s activity for all accounts can be viewed in one central place (handy for quick reference and budgeting purposes).

Why are there two shades of blue Tax labels?

Folders with light blue labels are for accumulating documents before paying taxes while folders with dark blue labels are for use after paying taxes. After taxes, re-file papers from the light blue folders into a single folder in the dark blue Archive.

After taxes, how can I fit all my tax documents for the entire year into one Archive folder?

If necessary, use a large box-bottom file for each tax year in your Archive. You may staple receipts by category before placing them into the Archive. The Archive for taxes eliminates the need to set up new tax folders each year while providing more than adequate retrieval of past tax records.

What documents should I set aside for taxes?

Choose labels for your light-blue Tax section according to your personal tax needs. For example, you may only need one Tax folder if all you rely upon for taxes each year is a W2 form. On the other hand, if you are self-employed or if you itemize deductions, you may end up using several tax folders. As a general rule of thumb, whichever documents you use to come up with your tax declarations will be sufficient for the IRS in case of an audit—nothing more is needed. If you are not sure what papers to set aside for taxes, take a look at your most recent tax return and see what supporting files were required. Many example labels are provided for just about any tax category. Consult a tax advisor to find out which deductions are available to you.

Should I file bank statements in the tax section or into a month folder?*

Personal banking statements, unless required for tax purposes, may be filed into a month folder. 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 summaries showing interest income, business account statements, or any personal account statements necessary to justify your tax return. As an added safeguard, you may deliberately file all bank statements with your tax documents, thus retaining them for ten years. See label sheet 2-1H for necessary labels.

MONTHLY

TAX

*See p.15 for limitations of liability.

*See p.15 for limitations of liability.

What if I don’t know in advance what documents I will need for taxes?

Even if you do not set up any tax folders, you will still have all of your receipts, paid bills, and statements filed by month. You can simply wait until tax time to see what documents you need, and then set up your light-blue Tax section accordingly. This will speed up your tax preparation for the following years.

Which Tax labels do I need for my home business?

For IRS schedule C/E businesses, start by looking at the actual papers related to your business. For example, you may deduct bills for several services such as utilities, telephone, and internet. Use separate Tax labels for each. For all remaining business receipts, choose labels only for your most frequently used categories, and file all other receipts in Other Expenses. This will avoid unnecessary folders. Note: If you use software to categorize expenses, you may save time by filing all business expenses by month or by vendor name A-Z (use blank labels provided or obtain the FreedomFiler® Business Kit).

Where do I file a receipt for an item with a warranty such as a copier that is also tax deductible for my home business? Should I file it into the Permanent or Tax section?

1. If you rely on the papers in your Tax folders for computing your tax deductions, it is best to put the receipt into a Tax folder so you will remember to deduct the purchase. After calculating taxes, you may re-file the receipt into a Permanent folder for resale or warranty purposes. Alternatively, at the time of purchase, you may file the receipt directly into a Permanent folder while placing a duplicate of the receipt into a Tax folder—even just jotting a note with the item name and sale price will be enough for computing your taxes later on.

2. If you rely on computer software or an expense book for calculating your tax deductions, file the receipt with the warranty into a Permanent folder under Warranties (after entering the transaction into your software program or expense book log).

Is it safe to throw away tax documents after ten years?*

The IRS has three years to challenge your tax declarations, but it has up to six years if your income is understated by more than 25%. Therefore, it is generally considered more than adequate to keep tax records for ten years.* Note: save the following forms along with receipts in a Permanent file for calculating taxable gains when you sell your house, investments, or any property:

■ Form 8606 for nondeductible contributions made to your retirement fund which can be withdrawn later without paying additional tax (if you frequently make nondeductible contributions, keep a separate account to simplify record keeping)

■ Form 8839 for property improvements made in support of adopted children

■ Form 3468 for energy saving improvements, electric vehicles, and other investment credits (continued top right)

■ Form 2119 only if you have postponed paying tax on profits from the sale of a previous home or homes before May 7 of 1997

■ Form 4562 for depreciation of property (the IRS recommends that you use depreciation tables as your permanent record instead)

■ Any other forms pertaining to cost-basis of an asset (i.e. purchase price and improvement costs). The IRS may change or introduce new forms.

Note: If you intentionally avoid filing a return or falsify records, there is no time limit for the government to charge you with fraud. If you have any special circumstances consult a tax advisor. If you are not sure, keep records of your actual tax forms (1040, W2 etc.) beyond ten years using the extra labels provided on sheet 3. After ten years have passed, you may discard cancelled checks, receipts, statements and the like.*

Are Permanent records really kept forever?

Not always. Permanent records are permanent only for the person or asset concerned, but may not be relevant after the person or asset has expired. In some cases, permanent records for a person may be kept with family heirs forever. Permanent records for an asset are filed with taxes when sold or passed to a new owner. When the asset eventually expires, in practice, the file should be removed to check warranty information, replacement costs, or to make an insurance claim in the case of damage or theft. For this reason, there is no need to purge Permanent files.

How do I prevent Permanent files from becoming overcrowded?

Because historical family and property records may accumulate, it is best to set up several permanent folders ahead of time. For example, instead of using a single folder for warranties and manuals, set up several folders using specific categories such as Apparel, Computer, Furniture etc. See similar examples on label sheet 4-1H for auto and home records.

Why are warranties filed in a Permanent folder given that they may expire?

Because warranties can affect resale value and because some warranties last for a lifetime, it is easiest to keep them in the Permanent section. Although many warranties do expire, they are still useful for knowing the expected lifetime of a product and to confirm that warranty coverage has already ended when an item eventually breaks down. Of course, if an outdated warranty is discovered, it may be discarded at that time.

PERMANENT

14

Is it safe to throw away old insurance policies?*

Once you receive a new insurance policy, there is often no practical reason to keep the old one. Note the following important exceptions and how to prepare for them:

1. If a claim is pending, keep the insurance policy and claim with your Active files until resolved. Afterwards, keep the expired policy and related documents in a Tax folder, to be kept for ten years (see General questions p.13 for an explanation of how to file other documents related to a claim).

2. If you anticipate a possible claim based on an event that occurred during the period of an old policy, file the outdated policy into a Monthly folder to keep for two additional years, or into a Tax folder to keep for ten years. Such claims generally do not apply to policies for health, disability, life, rentals, or automobiles having no unresolved accidents. For homeowner’s policies, consider damage that may go undiscovered for some time such as rainwater leaks, or lawsuits that may be brought against you for damages occurring in the past. (The time limit for lawsuits or claims is typically 2-3 years for most states but may be extended indefinitely to allow reasonable time for discovering unnoticed damage.)

3. For business liability or malpractice insurance, consider keeping past policies ten years or indefinitely to cover occurrences throughout the life-span of your business. Use labels provided with the FreedomFiler® Business Kit.

Keep in mind that your insurance provider typically keeps records of old policies for at least five years by state regulation, and is obligated to provide a summary of your coverage history should you ever apply for a discount on a new policy.

What should I do when I receive policy addenda or updated declarations?

File any addenda along with your current policy as they collectively form a complete agreement. If a new policy is finally printed, it will replace the prior policy and all addenda. Another type of document periodically issued is a summary of policy declarations, which is not the actual policy but a statement of your current elected coverages. Remove only the prior declarations and replace with the new. When replacing any declarations, addenda or expired policies, you may re-file these documents as explained in the answer to the previous question.

If I refinance my home, can I throw away the previous loan agreement?*

After reconciling all balances, keep the prior loan agreement and closing papers with your tax records. There may be prepayment penalties or unrealized credits you can deduct from your taxes.

Why are the purple Resource labels optional?

Before creating Resource folders, consider that more current information on most subjects can often be obtained very quickly on the internet or by a phone call. For example, rather than save travel brochures you can always browse online or call a travel agent to get the most up-to-date travel information when the time comes to plan your trip. If there is an article you wish to read, consider placing it into an Active file instead of a Resource file. If you don’t end up reading it, there will be plenty more current information on the same subject available to you at a later time. You may discard the unread article or simply file it into a month folder in case you decide to read it within the next two years. Recipes may be kept in a binder in the kitchen and magazines are best kept near the places where you enjoy reading.

How do I prevent my Resource files from becoming overcrowded?

You can save as many Resource files as you want guilt-free by simply partitioning your files before they become unmanageable. Refer to the diagram provided on your ACTIVE/RESOURCE reference card. Resource files can be rotated annually with your Monthly and Tax files, or wait until folders become completely filled. You may also rotate specific folders as needed.

Should I file active papers by category or by date?

The advantage of filing active papers by date is that you can spread out what you need to accomplish over a manageable time period. Most importantly, you can readily see when a deadline needs to be met without having to search through all your papers each day. On the other hand, category names are effective for filing papers that are not time-sensitive, such as items to be entered into a calendar or address book, or to reconcile. Category names also allow you to cluster related activities and to see the specific action required such as Bills to Pay.

*NOTE: While FreedomFiler® provides a method of automatic purging which eliminates the need to review files, you must ultimately decide which documents are kept for two years, ten years, or indefinitely. FreedomFiler® 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.

REMOVE/REPLACE RESOURCE

ACTIVE

15

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