Organize your tax files now
Getting organized now will save you time and money during tax season. No need to file an extension or pay penalties for a late tax payment. You won't have to pay your tax professional extra money to sort through your shoe box if you follow these simple tips.
- Don't wait until January! Set up files now.
- Create a home for tax-related papers and receipts. You won't have to sort through everything later. Make the "home" convenient! If it's not convenient, you won't use it!
- If you itemize your return, create 1 folder for each type of itemized deduction.
- Utilize technology. You can track mileage, deductions, and charitable contributions - there's an app for that! If you run a small business, use Quickbooks or another accounting software.
- Simplify your filing system. If you are using a software like Quickbooks, simply create January - December files and put all receipts, expenses, etc. in one monthly file.
- Set up good habits and routines! When you are making a purchase, write on the receipt "Personal", the business category , or who you are eating with.
- Create a designated "home" for receipts. Always put receipts in the same place in your purse or wallet. Once per week, clean it out and file them appropriately.
- Put each years' documents in the same place. You can easily shred the oldest when you file next years' documents.
- Consider going paperless. The IRS accepts digital documentation - no need for a huge file drawer full of receipts! Use a scanner and set up a digital file structure.
- Make your system as convenient and easy to use as possible. Done is better than perfect!
{Disclaimer: Speak to your accountant for tax advice. We are not tax professionals. Ask your accountant how they would like your tax documents organized.}