If your stress level was sky-high last April, you weren’t alone. Many of us scramble days before the tax deadline, searching our homes for receipts and paperwork. The key to a more relaxed tax season is organization. The tax deadline, April 15, is quickly approaching. While we can’t tell you how to do taxes, we can show you how to be more organized! Use these tips to make filing taxes easier:
1) Set Up a Paper-Based System
This sounds complicated, but it can be as easy as buying a few accordion or hanging folders. When organizing your tax papers, try the following:
- Choose one location to store all of your tax-related documents.
- Color-code files by category (ex.: green for home insurance).
- Separate personal and business records.
- Consider purchasing a filing cabinet as an efficient storage solution.
When following the steps above, be sure to appropriately plan for the number of documents you will be filing. Think about expense categories like medical, education, child care, mortgage interest, work-related costs you incurred, charitable donations, contributions to tax-deferred retirement accounts (401k, IRA, self-employed retirement accounts), and property taxes.
2) Set Up a Digital System
Many online tax filing programs will keep your records in their database. However, it’s never a bad idea to keep your own records. Set up a digital filing system using the following tips:
- Create a secure, safe space for your tax documents (think Dropbox or Google Cloud)
- Scan receipts and important documents, and save them in your designated folder. Don’t have a copier? Use a phone app such as Genius Scan or Scanner Pro.
- Moving forward, request digital W-2s from your employer.
3) Keep a Checklist
Have a list handy with information like your social insurance number, pertinent dependents’ information, and bank account and routing numbers if you pay or receive refunds electronically.
4) Develop a Routine
Throughout the year, resist the temptation to deal with invoices, receipts, and other paperwork later. By spending some time every day, once a week, or twice a month you will avoid lost time later looking endlessly for tax-related items.
5) Shred Old Files and Records
While organization is important, don’t spend unnecessary time organizing documents you don’t need. How long should you keep your tax records? Bankrate recommends you keep your records from the last three years—unless you’ve experienced extenuating circumstances, such as filing a claim for credit after filing a return. If you have old documents, check with your tax professional to determine if they are worth keeping. Otherwise, shred them and clear up some space!
6) Prepare for Next Tax Season
Save yourself time next tax season by applying your organization efforts. If you’ve decided to keep physical copies of your tax documents, create and label folders for next year’s tax season now. When April rolls around, you’ll be ready and relieved.
7) Get Help from Potomac Concierge
If your life is too busy with work and family, consider hiring a Personal Organizer to get you started and to maintain the system periodically. Instead of wasting valuable time in April wandering around the house searching for lost receipts, spend time productively now by setting up a system to make life easier later.
Tax season does not have to be horrible. Get a system that works for your personal and business needs, stay organized, and enlist help if you are overwhelmed. Call Potomac Concierge today to be connected to one of our Professional Organizers with expertise in paper and digital organization.