A simple system to help you get ready for tax time

As March comes to an end I can almost hear deep sighs of dread for the upcoming and often unappealing tax time.  April 15 is right around the corner.  And it gets a bad a rap all because of the tedious obligation we have to the IRS.

The best way to efficiently handle this time of year – every year – is all in the systems you set for organizing paper.

And I am not suggesting you wait til March to get organized. I am talking about being prepared  all.year.long.  And I am talking about using simple systems to get there.

Chaos occurs in your space and in your mind when clutter is present. Clutter is all the miscellaneous paper that is out and about. It is paper you might need mixed in with paper you probably don’t. And because you can’t easily comprehend which is which, you feel stressed and overwhelmed.

When it comes to tax materials, so much of it involves paper. And keeping it sorted and separated through the year is key to you being able to retrieve it more easily when it is time to file.

Here are some tips to do that.

1.Keep your system simple.

It doesn’t have to be perfect. It just has to work for you.  I am pretty sure you’d agree that scrambling each March to find all the pieces necessary to file taxes on time doesn’t quite work for you.  A nice, easy, simple-to-use system will have you going from tizzy to tame. When you keep things simple and specific you set yourself up for success and make it easy each day for you to keep with the system.

2. Set up a “Current Year Tax” file!

The “current year tax” file is your ace in the hole and is an easy way to keep in order what you need for taxes .  It is very simply an undated set of files folders (or dividers in a binder) that allows you to store papers throughout the year that you know you need for filing taxes.

To set it up, simply use a hanging file folder and label it “Current Year Tax”. If using file folders doesn’t feel good to you, you can use a binder instead.  Remember, there is no perfect; it’s about what works for you.

Then use manila folders to subdivide your files. How you divide the files depends on what you need to keep throughout the year for filing taxes. I own my own business and work from home so I need to keep all receipts related to work on the house. I also make donations throughout the year. Thus I have a Current Year Tax file with folders for “House Receipts” and “Charitable Donations” to name a few.

current yr tax

Don’t forget to label clearly and specifically! This is probably the most important part about creating the file.  When things are labeled specifically you take the guess work out, and filing and storing paper needed for taxes is a breeze.  {Note: If a current year tax file is not something you currently have, build it now and use it to sort through that huge stack of paper labeled “for taxes”. I you have already filed taxes, make the folder  now so you have it for next year!}

3. Purge your file cabinet/papers often

After taxes are submitted and you’ve [hopefully] gotten a big, fat return, give your files a once over. Your current year tax file will always be at the ready. But the rest of your files should be as well. Remember: 80% of what goes in a file cabinet is never used/looked at again. After taxes is a good time to clear out some of those files.  Keeping that area “light” and neat will go a long way in keeping you feeling sane.

Even with scanning and going paperless there is still a place for paper in our life – especially when it comes to taxes. Having a solid system for containing what you deem necessary will make dealing with dreaded taxes, easier.

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