6 Steps to Stay on Top of Your Taxes
12 Mar 2014
Getting prepared to do your taxes can be overwhelming, especially if you haven’t been all that organized about keeping track of your tax-related documents throughout the year. Not only do you need to keep track of tax forms you get in the mail (or on-line), but also receipts for tax-related expenses and donations, and it can also be very helpful to put your hands on your previous tax returns and documentation for reference. Of course if you get audited, the value of having your tax paperwork organized sky rockets!
Here are six simple steps you can take to be better organized when it comes to taxes:
- Collect and Corral: Choose a drawer or a bin and as the tax-related paperwork comes in, toss it in there. Also, create a folder on your computer to save electronic documents. Once you have collected it all (usually by March 1st), sort it into categories (1099s, W2s, Receipts, etc.) and paperclip each category together. You may want to print the electronic documents, or just have them organized and ready to enter into your tax return.
- Contain It: Have a folder or bin labeled for each tax year which includes your returns as well as any supporting documentation. After the six years have passed, you can weed out the extra paperwork and just keep your return.
- Go Paperless: Yes, the IRS does accept electronic documentation! Scanning papers or electing to receive electronic statements will help significantly reduce your paper clutter.
- Start Fresh: Once you have collected all of your tax documents, do a purge of all your files (paper and electronic).
- Keep Track Electronically: We strongly recommend that you maintain an electronic accounting system, such as Quicken or an Excel spreadsheet. Come tax time, all the information you need will be at your fingertips.
- Plan Ahead: Create a folder for next year’s taxes. As documents come in throughout the year, you’ll have a place to put them. More importantly, you’ll be able to find them when tax time comes around again.
Check these off, get this year’s taxes done, know you’ll be better prepared for next year and breath a sigh of relief…ahhhh.