Tax season organizing in 3 steps
It’s never too early to get ready for tax season! An ounce of prevention now will save yourself a pound of pain medication later. Whether you file your taxes yourself or work with an accountant, having your papers in order will save you time, money, and your sanity!
Here are my 3 steps to help you get your papers organized for tax season:
Get ready for last year (AKA the tax filing you will complete by April 15th).
By the end of January you should receive all of your tax related financial statements from your employer (W2, 1099-MISC), banks (1099-INT, 1099-DIV), and investment companies (1099-B). You may also receive a donation summary from non-profit organizations, like your church or another 501 (C)(3).
Depending on your financial and employment situations, you will receive several documents from different organizations.
Get a vertical file or folder today to put them in. Open the envelopes and toss those. You won’t need to do anything with these documents today but you’ll certainly need them when it comes time to actually do your taxes, whether you do it yourself or hire someone to do them for you. Having them all in one place will ease your anxiety when you start the filing process and need to reference them,
Get ready for this year (actually next calendar year when you’ll file taxes again)
Everyone needs to have a folder in the filing cabinet called “Donation Receipts” to keep track of all of those receipts from donations to charitable organizations. Whether it was Goodwill, Salvation Army, or any other charitable organization that gave you a receipt in exchange for a donation of goods or money, you need to keep this to report the donation on your taxes This will help you keep track of these receipts as you acquire them throughout the year.
I like to keep this folder at the front of my filing cabinet so it’s easy to get to and find later.
Get ready for next year.
Everyone needs a place to keep their tax records once the forms have been filled out and processed. This may include copies of financial statements and receipts so it could be quite a few papers per year. I recommend having a file box or drawer in a filing cabinet dedicated to storing your tax documentation. You don’t have to refer to this often but occasionally may need to know this information if you apply for a loan, buy a car, or refinance your house.
Use hanging files with tabs for each year, newest in front with oldest in back. Use 9 x 12 envelopes if you need to keep a lot of receipts. You need to keep these for 7 years.
*Bonus tip: write the years that the box contains on the outside front of the box. Use white duct tape and a sharpie marker if you’re using a plastic container. This is especially helpful if you have more than one box to contain 7 years’ worth of taxes.
When you are ready to retire previous years’ documentation, shred these documents because they have your financial as well as personal information on them.
I guarantee these steps will make the tax filing process easier but not fun. I am not a magician. 💫😉
*DISCLAIMER I am a professional organizer, not an accountant. Please consult your accountant or attorney for your specific requirements on document retention.
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