Tax time can seem very daunting to many of us. Putting some basic systems in place can take the stress out of the process.
Even though tax season is behind most of us…here is an organizing tip to prepare you for next year and thereafter:
First, create a main heading by year putting most current year in the front. For example: 2014 Taxes, 2013 Taxes, etc.
You may want to subdivide this hanging folder into 2014 Personal and 2014 Business…if applicable.
Within each main tax year folder should be some basic sub-folders. Examples would include:
- Medical Receipts
- Business Receipts: keep all business receipts
- Donations
- Supporting Documents: bank statements, credit cards, etc.
- Other: 1098s, 1099s, property taxes
Within this main folder would reside all tax documents prepared by your accountant or CPA
Recommendations:
- I recommend using an accounting software package like QuickBooks. What’s great about QuickBooks is it enables you to download bank and credit card transactions….which sure beats hand entering information.
- Another alternative to QuickBooks and capturing data would be using an excel spreadsheet. This way you can have a hard copy document to review your Income and Expenses and an organized work sheet for your accountant or CPA.
- Your tax files should include bank statements, credit cards, utility bills (if used for business purposes), all receipts, etc.
- General rule of thumb for keeping tax records is 7 years. Please consult with your accountant should you have special litigation issues which would require you to keep them longer.
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