Tax time already?! Are you always hunting for documents and getting frustrated/stressed-out because you can't find all of your receipts and you need to get your taxes done? Well, welcome to the club. I am here to let you know that you don't need a fancy-schmancy expensive organizing system to get you organized. I have two different methods for you to organize yourself so that next year isn't so stressful. Which one you choose determines how many documents you need to save and/or your household. For information on what documents to keep, please contact your tax preparer or check online with a credible, tax preparation company.
If you are always on-the-go or are the only person in your household who receives documentation throughout the year for your taxes, you will like what I call "portable" organizing. Below are two different methods of being portably organized. These methods can be stored just about anywhere such as a purse, briefcase, laptop bag, etc.
The first way is what I call "Mega Simple". This is a very eco/budget friendly method of organizing and not complicating at all, but it does keep documents together for when you are ready to use them a year later.
Mega Simple
1) Find an envelope. This envelope can be one that you have lying around the house or one you will be throwing away, because it came with a bill and you won't be using it. From years past, you already have an idea as to how many documents you need to save throughout the year, so keep that in mind when picking out your envelope! However, you can find a bigger one later if need be. If this is your first year, a regular envelope will do. Make sure to pick a closable envelope, so that none of the documents fall out. Note: Do not stuff the flap inside the envelope, because smaller documents will fall out.
2) On the envelope, write "Taxes" and whatever year you are organizing. Example: Taxes 2011. To make it more fun, get creative and decorate the envelope if your heart so desires! It's your envelope.
3) On a piece of paper or on the envelope itself, list any company which you know you will be receiving a year-end statement (Ex: W2, mortgage company, daycare/dependent care provider, HSA bank, etc). If you write it on a piece of paper, put the list in the envelope with the other documents. As the year goes by, add any additional company(s) to the list. Doing this will remind you to watch the mail for these documents in January and February or to call the company if you have not received it. As each year-end statement arrives, check that company off of the list.
4) Each time you receive a receipt or year-end statement, place it in the envelope......neatly.
5) Starting either in early December or the beginning of January, go through the documents in the envelope and sort them by categories (Ex: Medical (includes dental and vision), daycare/dependent care, investments,etc). After sorting, clip each category of documents together, calculate each category separately, put the dollar amount on a post-it/scrap piece of paper and either place it under the clip/stick it on the stack. After you have completed all categories, place all clipped stacks back in the envelope. If you receive more documents for that category, just recalculate and clip them all together. Hint: Having all items sorted and calculated ahead of time will not only eleviate unecessary stress on you, but will speed up the tax preparing process if you are doing it yourself or sitting with a professional tax preparer.
The second portable way of organizing your documents is what I call "Detailed". This will require going to an office supply store and buying a closable expandable file (letter or coupon size), unless you have one at home that you can repurpose. Depending on your budget, the quantity and/or type of documents you save, and what size works best for your household will determine which style you purchase.
Detailed
1) Before purchasing anything, sit down and create a list of the categories (W2/1099, Medical, Travel, Daycare, Donations, etc) you will be receiving documents for throughout the year and at year's end. Remember to include a "Misc" (Miscellaneous) category for unexpected documents. Creating the list will help you to determine the tab quantity of the file you will need to purchase.
2) Once you have determined your quantity of categories, purchase a closable expandable file with tabs. If the file has a couple more tabs than you need, that's fine. Having a file with tabs will help you organize quicker and having a closable file eliminates documents from falling out.
3) Label your tabs and put them in the holders. You can do this alphabetically, most often used, or what best fits your household. Color coding the tabs (using highlighters or markers) will make filing easier (Blue - Medical, Green - Investments, etc.) and if you want to be really creative, decorate the outside of the file!
4) On a piece of paper, list any company which you know you will be receiving a year-end statement (Ex: mortgage company, daycare/dependent care provider, HSA bank, etc). Put the list in the last section....even if its being used. As the year goes by, add any additional company(s) to the list. Having this list will remind you to watch for these documents in the mail in January and February or to call the company if you have not received it. As each year-end statement arrives, check that company off of the list.
5) As you receive each document, place it in the designated section. All documents that do not have a designated tab, place in the "Misc." section. If you acquire three or more of same document and you have an unused tab, create one for that new category. If all tabs are used, clip all same category documents together, place a post-it on each stack with the name of the new category, and put back in Misc section.....no need to buy a new expandable file.
6) Starting in January, pull the documents out of each section and calculate them. Write the dollar amount on a scrap of paper. After calculating, place the stack and the scrap of paper back in the section....no need to clip it together. If you receive more documents for that category, just recalculate. Hint: Having all items sorted and calculated ahead of time will not only eleviate unecessary stress on you, but will speed up the tax preparing process if you are doing it yourself or sitting with a professional tax preparer.
You are now ready to do your taxes or drop them off at your tax preparer! Remember, if you are taking them to a tax preparer, be sure to have your name and phone number on the envelope or expandable file, so he/she can call you with any questions.
As a single mom for over a decade, I had to figure out better time management/organizing methods to lessen the stress in my daily life. I used the Mega Simple method and my tax preparer loved it! He didn't have to do much work and I didn't have to sit there as long. After a couple years, I was able to drop off my file and he would call if he had any questions. I have been using the Detailed method (coupon file) for my bills for years and will be converting my taxes to that method this year, since I am now remarried and will have more documents to save. But, do what works best for you and you will find freedom of stress and you will have more time to spend with your family. I know that's the most important thing in my life.
With this being my first blog that I have ever created, I hope these methods have helped you. Please look for additional blogs I will be creating in reference to "Non-portable methods to organize yourself for the tax season" and other organizing tips.
Good luck!
