Tame the Paper Monster - Manage Your Tax Records
by Bob Williams
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For many Americans, the scene is the same every April: you're sitting on the floor surrounded by scores - sometimes hundreds - of pieces of paper. Receipts, bills, deeds, and other important documents that you may need to file with that year's tax return. As you look around the room, only one emotion comes to mind: overwhelming fear. Where do you start?
But you can avoid all that in April, if you take a few steps now. Whether you pay a preparer to do your return for you, or you do it yourself, you'll want to keep that personal paperwork organized and easy to find.
Take a moment to think about how you expect to file next season's return. Do you itemize? Do you own your own home? Got kids in college? Or do you expect to file a straight-forward return with no deductions?
Once we know how we expect to file, we can organize our paperwork to fit that. One easy way is to first use a document box - available at most large discount stores - as the overall repository for all those little, but very important, pieces of paper.
Now it's time to think inside the box. Just dumping receipts inside isn't the best strategy. It'll take way too much time looking for just that right piece of paper to make that practical. What you want is a general filing system. Think categories here: house, charity, child care, auto, and so forth.
Buy some large "barrel" type clips and label each one with the names of each of your categories. Then, it will take just seconds to put your receipts away every month and clip them where they belong. You are now instantly organized, and April isn't looking nearly as scary.
Of course, if you have a different system that works, that's fine too. Some people like file folders, but slips of paper can fall out of folders, so file pockets might be a better choice for that type of system.
The point here is to get those wayward bits of paper organized early, a little bit at a time, into manageable bundles. That way, when you're looking for that special record - say, the gas receipts for the Scout troop - you'll know right where to find it.
Whatever system you decide to use, remember to use it - don't let the receipts and other paperwork pile up; otherwise, you're right where you started, sifting through a pile of stuff. Set aside a time every month to put your receipts and important papers away. You'll find tax time a lot less taxing - and you'll never miss another deduction because you couldn't find the receipts!
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