FilesMake it a goal to make next year’s tax time a breeze by getting organized NOW! Use these tips to set up a simple and effective filing system. You’ll be able to slip in important papers throughout the year and tackle next year’s taxes with ease.
• Create categories: Use standard file folders or large 9x12 envelopes to create categories. You’ll need several for deductions; depending upon your circumstances, they might include charitable donations, medical expenses, child care credits, education expenses, mortgage interest, etc. You’ll also need a folder for income-related papers, such as pay stubs. Create another folder for investments, so you can track taxable interest you’ve earned on savings accounts or investments. Also, create a general tax file to store W-2 or 1099 forms. If you have a home-based business, consult your tax advisor for additional documents to save. Such as employee information, etc.
• Store them: Either place the folders all together in a section of your filing cabinet using hanging file folders, or purchase a plastic file box or expandable wallet to hold all the folders. Keep it conveniently located in your home.
• Collect the papers: Throughout the year, add receipts and documents to the appropriate file folders as soon as you can.
• You’re set: When tax time rolls around, pull out all the folders and use them as you prepare your tax documents. Or, take the whole shebang to your accountant’s office. They will be impressed!
• Plan ahead: Create new files with the same category names so you’re ready to start collecting the next year’s tax papers.
FYI: Most common question used is what to keep. IRS just updated to having to keep records for 4 years vs. 5 or 7. Not sure if they've updated their site to match but here's a link.
I know...all this is "taxing" and you may not want to do it...so call Extra You, we will get your files in order, regularly maintain at a discounted rate (different from an organizational rate) and keep you organized!
Rebekah Phelps
703-980-1114
