Tax season is underway! You can make this task faster and easier by organizing your paper and digital records. The sooner we organize our records, the faster we can file our returns and receive our refunds.
Disclaimer: You should always consult with a tax professional and refer to official IRS publications for definitive expert advice. The organizing advice I share today is meant for general organizing purposes and is not meant to constitute expert tax filing advice.
What records do I need to keep and how long should I keep them?
- Consult with your tax professional NOW to determine what specific records you need to have to prepare your tax return. Many firms have a checklist available to clients that you can find on their website or request from their office.
- Important household records include bank statements, investment earnings statements, purchase and sales statements, contracts, credit statements, lease and loan agreements plus payment records, pay stubs, and itemized deductions such as charitable contributions, medical expenses and business expenses.
- Keep your tax returns and supporting documents for the current year plus six previous years.
Tip: Pay for tax-deductible items by check, credit card, or electronically so that you can track the receipts more easily than keeping small paper receipts.
How can I organize my records?
- Sort your records into categories identified in the list of records above and put them into paper or digital folders labeled by type of record, such as “IRA 2014” or “Medical Expenses 2014.”
- Always create multiple backup copies of digital records. You can copy them to a stick drive or external hard drive and/or back them up to a cloud-based system such as Mozy, Carbonite or Crash Plan.
- For paper records, manila folders or an accordion file with multiple pockets are good containers.
- As you file, put them in reverse chronological order with your most recent records on top.
- Start a new file for each year and store last year’s tax records in a file drawer or portable box with a copy of your tax return.
Rachel M. Gambone is the owner of ReOrganize with Rachel, LLC. In addition to general home organizing, she specializes in helping you organize your office, papers and digital information. Her signature approach is positive organizing where she builds on your strengths, helps you find your treasures, and teaches you life-long organizing skills. See more organizing tips and a link to her free podcast at www.reorganizewithrachel.com.
