Tax season is upon us and it is time to gather those papers and either complete your own taxes or hand them over to your accountant. Either way, you want them to be easy to understand and easy to complete.
If you start out the new year with a plan, your gathering at the end of the year will be easier. You should always have a folder in your filing cabinet marked "taxes". Most of us do not receive any tax papers until January, but you do make contributions and donate items to local charities throughout the year. A single file will be so much easier and simpler in January then looking through drawers and hundreds of papers. Many of us have medical bills we pay throughout the year. If you have a health savings account through work, you should keep the receipts for those bills you paid through the debit card you were given. Many individuals do not have enough medical payments throughout the year to deduct, but for those you do, a file with all those receipts will be much easier for you or your accountant to add up in January.
If you own a business, as I do, keeping the receipts for your business is just as important. This too should be a single file. I separate mine into an excel spreadsheet by the type of expense it is according to a Schedule C. You might you use Quicken or Quickbooks which will help you in this category organization too. If you write off a room as an office, you will want your gas and electric bills as well to write off the percentage that pertains to your situation.
Other tax items I have not mentioned may pertain to you and those papers should be in a separate file if they come in throughout the year. For those papers you receive only in January, a large expandable file is a great way to collect them and keep track of them until you are ready to complete your taxes. Do not lay them down in an already cluttered area where you may never find them again. I find donations and receipts in many of my clients homes that they could have used in previous tax years. It might not be a big amount, but if you add them all up and over the years, they could have reduced their tax bill.If you have to spend hours looking for all your tax papers, complete the search in sections. Break the area down to small manageable spaces you can search in an hour or less. Try the tips above to eliminate this process next year.