How to Organize Finance : Tax Papers!

Some love, some hate tax season. For me, it's usually a guessing game. I can never figure out how many deductions I should keep so I pay/refund a minimal amount. I'll add that on to my things to do. ;)

You know the time is coming around when you start to open up mail and you receive a whole bunch of tax statements. W2's, Mortgage Statments, Investment Statements, etc. What do you do with them? Put them back in the stack of mail you're yet to sort? File it in the "I'll deal with it later" pile? What happened to all the other papers & receipts you've collected thruought the year, like Donation receipts? Can't find them? I've been there. And I hated it.

This is an easy fix - and it works well for us.

A Tax Envelope!

Nothing really fancy here. It's just a durable envelope with little binder pockets inside. Anything that has to do with taxes goes here. It really helps to have this especially since I'm starting to make monthly trips / pickups to Salvation Army. After I get my donation receipt - I enter it into my .xls with details (optional) and into the Tax Envelope it goes.

I usually have a checklist of paperwork that my Tax Preparer requests - like receipts for deductions, unreimbursed business expenses, and the other regular papers. The checklist changes every year depending on what they need. It's a good reference - I check to see if it belongs in the envelope. If it does, in it goes. It's also a good idea to keep a copy of last year's Tax Return and copies of checks if you paid. I'm a little anal - I print out and highlight the line item of the tax refund/payment and file it with that copy. Better safe than sorry!
I also keep a list of Tax Identifiers for reference like my daughter's day care. Can't call the day care on a Saturday!

As soon as the checklist is complete (Mid February) I call and make an appointment. A few days before going to our Accountant, I do the following :

: Print an Avery Label Templates. One for me, one for Mr. Broke.
It includes --
Tax Year
Last Name,First Name
Last 4 of Social
Phone#
I do this because unorganized people can easily shove our paper into another person's file. I put the phone # in because I saw how hard it was to get out of the Tax Program just to call someone if they have a question about something. I want our Accountant to love us.
Sure most of the informaton is already on the paper/statement, but you won't miss my NEON PINK label! Haven't seen anyone do this - and they like it! I place the labels in a uniform spot - usually on the bottom left of EACH paper, making sure I don't cover any important information. These papers won't be sent off to the IRS - so I can do whatever I please. Should there be something wrong with my bright pink labels, I can easily retrieve another clean copy.

: I make copies of EVERYTHING in the tax folder and put it in a temporary Tax Folder. There was a year when another Accounting office lost some pieces of papers! When the Tax Preparation is done, I file everything away in the long term filing cabinet.

: I also COUNT how many papers I bring to the Accountant. It's simple for me, since I don't need to submit receipts. As soon as everything's done, I re-count my papers and make sure that each paper is accounted for. See, Anal. I'm sure it's safe at their office - they deal with personal stuff all the time - but I'd still like to keep my business confidential. No one needs to have my papers if they don't need them. If they need them, they know where/how to contact me. I don't want my papers mixed in with another person's paperwork resulting in a ugly audit. - It's happened (not to me, fortunately)

I know it seems like a long drawn process, but because everything you need is there already - it doesn't take me more than 20 minutes to complete this preparation. I don't fear tax time like I used to!

Hope this helps!
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