7 Important Organizing Tips for Tax Time

While most of us are eagerly awaiting springtime, many do not look forward to tax season.

It can bring stress, anxiety, and worry, especially for those who aren’t adequately organized.

But if we educate ourselves and know what we need to provide our accountant, it allows us to be better organized.

Follow these tips and approach next year’s tax season with confidence:

1. Use a filing system that will eliminate paper pile up throughout the year, providing easy access to paperwork and receipts at tax time. It begins with a plan suited for your individual needs. Hanging files and tabbed folders are a good option. It is very important to use broad categories such as financial, medical, legal, etc. Too many subcategories will create a messy file system. Simple is best.

2. Make sure you have a good accounting system for your home or small business. This will allow you to know precisely your income and expenses. With a clear picture of your finances, it is easy to see where your hard-earned money is going.

3. Save any receipts you may be asked to provide should you be audited by the IRS. If in doubt, check with your accountant. Don’t delay in asking which ones to keep, what notes to make on them, and how long to keep them.

4. Consider a phone app or scanner to scan and eliminate extra paper and prevent fading receipts. Neat Receipt and QuickBooks Self Employed are some good options if you have a large volume of receipts. Both have phone apps available. If you are intimidated by new technology, simply use an envelope system.

5. For those who have a small business, do not rely on credit statements alone. Again, keep receipts for items the IRS could question.

6. Always contact your accountant before discarding any financial investment paperwork, property files, or tax returns. Be safe – ignorance is no excuse when it comes to the IRS.

7. Finally, ask your accountant how many years of tax returns you should keep. Store each year saved and backup in case of a future audit. With guidance you can eliminate the unnecessary paperwork you have been holding onto for years and free up some space.

Dina Taylor, owner of Easily Organized in Dallas, works with clients in Texas and Florida.

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