How to Organize Your Tax Documents Throughout the Year
Hey, friend! Welcome back!
To continue with this month’s topic of paper organization, I’d like to quickly go over some tips on how you can store all your tax documents throughout the year in order to save you some time when it comes to tax season!
**Disclaimer** I am NOT a tax professional. These are just some tips to help you organize your paperwork. If you have questions on what specific paperwork you need for filing, please consult a CPA.
For me, tax time has always been a drag. When those W2’s start rolling in I start thinking to myself, “Oh geez, now I have to start looking back at the previous year and determining everything I need for filing.” That was, until I started doing this system for myself a few years back.
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Last week I talked about How to Organize Incoming Mail and within that post, I mentioned setting up some sort of mail bin. Inside of that mail bin, will have an expandable file folder labeled “Taxes”. Can you guess where I’m going with this?
Here is what you are going to do with that “Taxes” folder:
1. Label the Folder
First thing you want to do is label the file folder with your name and taxes (especially if you have more than one person filing taxes in your household. For example, my folder says, “Amy Taxes”. Simple right?
2. Attach A Checklist
The next thing you will want to do for your individual folder is create a checklist of all of the documents that you are going to need to collect throughout the year so that when it comes tax time, you can check off everything, or see if you are missing anything. Keep that checklist inside of that file folder. So for instance, these are some things you may have on your own checklist:
W2 (from whatever company). If you have multiple jobs, list each W2 separately
Bank Interest/dividends. Again, if you have multiple banks, list each bank separately
Property taxes
Medical expenses
Stock earnings/losses
Student Loan Interest
Business related information
Again, these are just some examples. You may have more or less depending on your situation. This is why I suggest to consult with a CPA on any particulars you will need. If something new comes up throughout the year that you know you will have to claim, then add it to your checklist throughout the year.
3. Fill Your Folder
If you have a medical expense that comes up throughout the year, you can either add your receipt to the folder, or you can have another list in the folder where you just record the amount of money spent for each visit/medical expense.
For any piece of mail or paper that comes into your home you know you will need for taxes, put it in the tax folder. This is especially useful at the beginning of the year once you start getting all of those W2’s in the mail.
4. Gather Your Information
It’s tax time! When you think you are ready to file, get your tax folder and checklists. Go through all of the papers in your tax folder and check off each item that you already have on your checklist. If you do not have something, chances are that you can access it online. Log into your online accounts and print any other documentation you may need, such as bank dividends or anything else that may be online. Once it is printed and put into your tax folder, check it off the list!
How simple does this process sound to you? Talk about a time saver!
5. Create Your Checklist
Now that you have submitted your paperwork to your CPA, or have filed your taxes already, now is the time to create another checklist. If you made a checklist on the computer, all you have to do is print another off. Make any adjustments to your checklist that you know of right away and put it in the tax folder to start collecting for the coming year.
Looking for more? I’ve put together this simple Incoming Mail Process that will help you sort through your papers and decide what to do with them right away.