Making Cluttered Tax Documents a Thing of the Past
Getting your home office organized and straightened up—and keeping it that way—is a year-long task. A perfect example is tax documentation. While many of the forms and statements for your annual return generally arrive in January and February, other documents that are important to the process filter in during the entire 12 months of the year.
Be it medical receipts or statements from making charitable donations, the paperwork needed for your tax return is continuously on the rise. In order to keep your living and working space from being littered with these papers, you must plan accordingly and establish a process. Let’s look at these in more detail.
First, there’s the before-mentioned paper. Counter to typical de-cluttering practices, we recommend playing it safe and retaining all tax-related documentation. Keep any records that could be needed for tax preparation—you can purge unneeded documents and materials after you’ve filed. Note that if you’re an owner of a small business or self-employed, it’s likely that you’ll be required to keep even more documentation than individual filers.
Following are examples of tax documents individuals should maintain throughout the tax year. They include but are not restricted to:
• Mortgage interest and property tax statements
• Bank interest statements
• Investment statements
• Medical and charitable donation receipts
• Account registers
Many planners and organizers have sections where monthly records can be maintained. Keep and file these sections as well.
Granted, this could potentially be a staggering amount of documents and information. That’s why you need a plan.
Lack of planning is a common cause of tax time clutter. Tame the clutter by setting up a monthly filing system of documents needed for your annual tax forms. For example, organize by categories (e.g., income, investments and deductions) using large envelopes, expanding files, or organizers designed specifically for tax materials. Color-coding is extremely beneficial for this type of organization as well.
While there isn’t a single style that works for everyone, we recommend some type of year-round filing system. Include regularly scheduled updates (e.g., weekly or monthly), breaking tasks down into manageable and reasonable pieces.
The key to making all of this work is to keep the process moving by sticking to the plan. Use your calendar, checklists and reminder tools like Post-it® notes to stay on track. Once tax time is here, schedule yourself appointments in ½-hour to 1-hour blocks to work on your return(s). Depending on the individual, these “appointments” may be small in number or could spread over several weeks. Plan accordingly to meet the deadline, and keep on pace by setting small milestones that you can check-off as you complete.
And if you happen to get stuck, don’t fret—there’s plenty of help at www.irs.gov, and we always recommend going to a professional if you’re unsure about anything on your return. Remember, tax filing fees are deductible.
By eliminating and consolidating cluttered tax document files as well as setting a solid plan and process, you reduce the chances of making errors on your tax return. So what are you waiting for? Get productive, get de-cluttered and get your taxes filed!