How To Keep Organized For Tax Season

By Author: Jeff Parrack
Total Articles: 4762
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Every year, that dreaded day, April 15, takes Americans unaware. It is not as though the date changes from year to year but many Americans find it creeps up on them and they are not ready to file their taxes. They dig through drawers, pockets and wallets, hunting around the house for the forms that arrived weeks before, and panic sets in! There is a simple way to make April 15 more bearable. It won't mean that you don't have to write that check but it will mean that you won't have the extra stress of hunting for receipts and paperwork. So stop procrastinating and get organized! Follow a few easy steps to make April 15th just that little bit less stressful.

Step 1: Create the "Tax Space"
There is a LOT of paperwork for tax time and having it all in one place is a great start. Decide one place where you will put it all. Maybe put it all in a drawer, folder or large envelope.

Step 2: Gathering it all Together
Once you have created the "tax space," the next obvious step is to fill it! That means hunting through the house to collect all the paperwork and files. Get your receipts, cancelled checks, bank ...
... statements, receipts for charitable donations, mortgage interest statements, investments statements, real estate tax statements, and whatever else you need. When tax forms, like 1099s and W-2s, come through the mail, do not leave them with the rest of the mail. Put them immediately into the "tax space."

Step 3: Clearing the Clutter
Use your time hunting for your paperwork to clear out any old paperwork that is no longer needed. Almost everyone finds old credit card statements and receipts from previous years. Take the opportunity to clear these out and shred or recycle them. Be careful that you don't throw anything you need away. It is a good idea to check with your lawyer or CPA before shredding!

Step 4: Categorize It
Once you are sure you have everything in one place, sit down and go through each item and categorize everything. A useful tool is for this is an accordion file with separate pockets which is really helpful for keeping paperwork in one place and categorized. Label each section to make it easy to see. Most people will find that their receipts and papers will fall into categories such as salary, medical, real estate, childcare and investments. An alternative is to label by month and keep all paperwork related to that month together. This is perfectly fine but it does mean that, at the dreaded tax time, you will have to categorize each month. Either system will work and better than not having a system at all!

Step 5: Plan Ahead for Next Year
While you are investing in one accordion file, get another one and start preparing for next year. This way, you are always ready for the current year and able to prepare for the coming year. If you get into the habit of filing receipts, statements, cancelled checks, and such as they come in, next April 15 will be a stress-free experience.

Step 6: Get Your Paperwork in Order
Before you start working on your tax return, get everything in order. This will help make the process easier.

Good Habits
It is a good idea to get into the habit of shredding bills monthly, as they are paid. That way they don't get mixed up with your tax paperwork and it keeps clutter down to a minimum.

Ask your lawyer or CPA how long you should store old tax-related paperwork. Many recommend six years. Also, when buying equipment, it is a good idea to keep the receipt as long as you have that item. The same applies to home improvements.

Once you have gone through the above steps and survived the coming tax season, you will wonder why you did not do this before. From now on, follow these simple steps and make April 15th just that little bit less horrendous next year. You will never enjoy writing the check but at least you will know that you have maximized your deductions by keeping all your paperwork together and in order. While you may not look forward to April 15th, maybe this time it will not be quite so stressful.
About Author:
At Online Tax Extension we provide an irs extention and coordinate with the IRS on a personal and professional level to guarantee the smooth transfer of sensitive personal, financial, and tax information as quickly as the IRS computer system will accept it from us for as many of their forms as possible.