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Organizing Paperwork Makes Filing Taxes Easier

Take time to set up tax-related files for next year. Organizing tax-related paperwork makes the the process of filing your taxes far less tedious.

This is the time of year when we often say to ourselves, “If only.” “If only I had done a better job of organizing my records filing taxes wouldn’t be so tedious.” The key is to create a filing system to organize your tax records at the beginning of the year, and to file paperwork as needed throughout the year. Most tax records fall into the categories of income or deductions.

Organize Sources of Income

Organizing paperwork into files will save you time, money and frustration. Keep files for W-2 Forms, 1099 Forms, social security, pensions, bank statements, brokerage statements and any other sources of income. Why? Your records help identify the sources of your income. You can separate business from other income and taxable from nontaxable income.mSince many tax records come around the beginning of the tax year, keep a separate file for the current tax year where you can easily access it.

Keep Track of Expenses to Maximize Deductions

The IRS allows you to deduct on certain kinds of expenses from your income. To deduct expenses you need to be able to prove the expense with a receipt, cancelled check, credit card statement or other proof of payment. Deductions may include mortgage interest, property and real estate taxes as well as moving expenses, charitable contributions and contributions to IRAs. Interest on student loans and medical expenses may also be deductible.

Record the Cost of Property and Home Improvements

Save documents verifying the original cost of your property as well as records of the cost of any improvements you made. Why?  You need this information to determine if you have a gain or loss when you sell your home or to figure depreciation if you use part of your home for business purposes or for rent. Your records should show the purchase price, settlement or closing costs, and the cost of any improvements.

How Long Do I Keep Tax Paperwork?

The law states that you must keep your U.S. tax returns indefinitely and your
tax records for seven years in case of an audit. I encourage clients to store
supporting documentation with their tax return. Consult with a tax professional
to learn what deductions you qualify for so you will have the documentation you
need. Keeping accurate records is one way to ensure you aren’t giving Uncle Sam
any more than he’s entitled to. It also gives you the peace of mind that if the
IRS does come knocking, you’ll be ready.

Get rid of that “if only” feeling. Today is the day to start organizing for next year.

Jane Carroo is a recognized Certified Professional Organizer and owner of Clutter Coach Company, which she founded in 2004. Jane combines her experience as an
educator, life coach, certified professional organizer and senior move manager
to help clients gain clarity and control over their space, paper and time. An
inspiring author, Jane has been featured on NBC, the CBS Early Show, A&E
Hoarders and many print and online publications

 

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

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