It can be quite tedious and time-consuming, but it can make the entire tax process that much easier. If you feel the upcoming tax season looming above your head, here are a few organizational habits you can form now to alleviate your stress later.
Designate a “tax space”
Find an empty drawer in your desk or some sort of designated space that you keep all of your important tax documents. It's not limited to just your office or study, though. Place it all in a basket on your kitchen counter if that fits your fancy. You could create a tax space really anywhere in your home, as long as everything stays in one place and you are consistent with where you place your documents. Just make sure it's somewhere impressionable so you won't forget it's there or shrug it off.
Separate receipts into their respective categories
Organizing your receipts into their appropriate categories makes it easier for your tax preparer to distinguish where you're spending your money throughout the year. So you're not scrambling last minute to organize that huge pile of receipts in front of you, make your receipt organization system easy. You could buy a binder or file folders. You could even buy simple white envelopes, label them with a pen, and organize all of your receipts that way. This is extremely helpful if you have a side gig, donate to charities, or often donate clothing.
Go digital
If you're more technology savvy and saving space in your home is important to you, you may want to consider organizing all of your documents digitally. Just take a picture of your receipts as you get them, and when you find time, upload those pictures to a folder on your computer. You should also consider looking through the app store on your smartphone to see if they have any efficient applications that will sort your documents. Many banks offer electronic delivery of your account statements, mortgage statements, and tax documents. This can be can an easy way to keep your documents stored in one single location and better yet, they are stored electronically for up to seven years.
Check your schedule
It's easy to find time slipping away from you if you don't fill in a slot on your calendar to organize your tax documents. Whether it's once a week or once a month, check your planner for any empty space. Use some of that free time to further organize anything you feel isn't up to par or catch up on tasks you may have put off in the prior month.
Everyone has a certain method to their madness
Organizing your taxes is all about finding the right method to suit your needs. The most important thing is that you do it. For more information on tax preparation, check out Central Bank's Learning Center.
NMLS #407985