Get Organized for Tax Time

If you're like most people, the thought of preparing your tax return is stressful! Make taxes less taxing by getting organized now.


Elizabeth Carlassare
3-minute read
Episode #59

By now, you’ve most likely received your W-2s, 1099s, and other tax-related statements for 2007. So today’s topic is getting organized for tax time.

If you’re like most people, the thought of preparing your tax return is stressful! One of the best ways to make taxes far less taxing is to get organized.

Get Organized Now

And now’s the time to get started. Don’t put it off until the evening of April 14th! Get organized now, and preparing your taxes will be much less daunting.

A little organization goes a long way. Having a designated place to put your tax-related paperwork and receipts will save you headaches and stress because you won’t need to waste time at the eleventh hour searching hither and yon for a lost W-2. It will also help you maximize your deductions since it will reduce the chances of misplacing receipts for deductible expenses.

It can also save you money if you use a professional tax preparer. Tax preparers and CPAs usually charge by the hour, so the better organized your paperwork is, the more efficiently they can prepare your return.

You Need a System

Getting organized starts with having a place to put your paperwork. Even if you have a simple financial life, you need at least a two-drawer filing cabinet to organize your financial documents. This filing cabinet is a one-stop location for all your important financial paperwork such as bank statements, mortgage statements, property tax records, retirement plan statements, and brokerage statements. Put it in a place that makes it easily accessible.

And, if you’ve managed to avoid filing altogether up until now, you’ll also need some supplies: Get a box of manila file folders and a box of hanging file folders.

Keep It Simple

Use one portion of your filing cabinet for taxes. Label a manila folder something creative and catchy like “2007 Taxes.” Gather together the tax documents you’ve received, such as W-2s, 1099s, and mortgage interest statements and drop them in this folder. If they’re buried on your desk or scattered on your dining room table right now, go gather them up and put them in this folder.

You’ll also want to put receipts for deductible items such as charitable contributions, investment-related expenses, medical expenses, and tax preparation software in this folder. Don’t forget to put your property tax bill in the folder too. If you have a lot of receipts, put them in a large envelope also labeled something creative and catchy like “2007 Receipts.” Then, put the envelope in the manila folder. And if you have receipts that fall into different tax categories, such as charitable contributions and rental real estate, use a separate labeled envelope for each category. An accordion-style check organizer also works well for organizing receipts in different categories.

Next, label one of your hanging file folders “2007 Taxes” and put your “2007 Taxes” manila folder in this hanging file folder.

And while you’re at it, set up your system for this year too. Create a hanging file folder and a manila folder labeled “2008 Taxes” and put them in your filing cabinet. Now you have a place to put your tax-related paperwork and receipts for deductible expenses for this year as you get them.

And there you go! After you’ve done this, you’ll feel much, much better. You’ll breathe a little more deeply and you’ll notice the birds sing a little more sweetly. And if you use an accountant to prepare your taxes, you’ll find that they’re a little sweeter too after you impress them with your organized paperwork.

Today’s Book Winner
Today, congratulations go to a listener named Damon. Damon wins a copy of How to Stop Worrying and Start Living  by Dale Carnegie. Damon was automatically entered in the book giveaway when he sent me an e-mail.
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As always, everyone’s situation is different, so be sure to consult a tax or financial advisor before making important financial decisions. This podcast is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice.
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