Organizing Papers Post Tax Season

Aren’t you glad April 15th is OVER? There is no less dreaded time than tax season for most of us yet surely there are ways we can make it easier and less painful? Can’t we cut down on the stress of tracking receipts and other financial paperwork?

You betcha! It just takes a little prep now to have a happier tax season next year.

First, once you’ve filed your current year’s taxes, get a large envelope (9″ x 12″) and put all tax relevant documents in it. This means any receipt that was evidence of a deduction, your copy of your 1099s or W-2s, investment statement receipts (1099-DIV), ad valorem copies, etc. Any itemization (receipt, document, etc.) mentioned in your tax return needs to go in this envelope along with your signed copy.

Next, on the outside of this envelope, label it in marker, “Taxes ____” and whatever the year. This envelope should go to storage that is out of the way and not taking up valuable real estate because you shouldn’t need to access it anytime soon.

I recommend having a file box or drawer that is just for taxes so that you keep them all together.

You need to keep copies of your taxes for 7 years. The IRS can audit your returns up to 7 years ago so hang on to these. They would like to see receipts in case of an audit so make sure you keep copies of them, hence the envelope. For complicated taxes with lots of documentation, get a few envelopes. Another option is to get small accordion files to store them in. It’s better to keep this paperwork in a closed container so it doesn’t get lost or mixed up with other papers.

Now you can clean out any receipts from last year that you thought might be used for taxes. If you didn’t need them for taxes, you probably don’t need them now.

The exceptions to this could be but aren’t limited to:

  • receipts for ongoing or complex medical treatment
  • receipts for expensive furniture or home repairs
  • receipts for purchase of car, boat, motorcycle or other vehicle
  • receipts for purchase of appliances such as dishwasher, HVAC, or washing machine. Write the purchase date and location on the inside of warranty information for these large purchases because the paper receipts will fade.

Lastly, create a home for future incoming tax related receipts. I use a file folder at the front of my cabinet labeled “Tax Receipts” so that it’s easy to drop papers in there as necessary. Make it easy for yourself and get something that doesn’t require a lot of effort to access such as an open box or container or file as opposed to a lidded box on a high shelf.

The goal is to have a home for this documentation so that you can retrieve it if necessary. Knowing what you have and where it goes is 50% of being organized. The other 50% is actually putting things where they belong.

Happy organizing!

p.s. Here’s the fine print: I am not a CPA nor an attorney or tax adviser in any capacity. I am an organizer who likes saving time and energy by not having to look for things. Please consult a CPA or other financial adviser for specific questions you have about what to keep or toss.

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