Simplifying Tax Time
Brought to you by Joan Kosmachuk, Professional Organizer
and Personal Life Coach

“The hardest thing in the world to understand is the income tax.”
Albert Einstein, physicist

The deadline for filing your income tax return is just a month away. If you find yourself tearing your hair out as you frantically search through piles and files for those key receipts, it’s time to create a new system of organizing your tax information.

Follow these 3 simple steps to simplify your income tax preparation and filing for years to come.

1. Label two hanging file folders: “TAX RECEIPTS.” Add “even year” to one label and “odd year” to the other label. This will allow you to keep things straight Jan-April when you’ll be receiving receipts for the previous year as well as the current year. Keep these files in an easy to access location. You can keep them in your desk file drawer or, if you are a visual person, in a desktop file holder or literature sorter so they are out in plain view and won’t be forgotten.

Whenever you have a receipt that you will need for your tax return, simply drop it into the appropriate hanging file.

If you have a large number of tax receipts you may wish to create additional folders for specific categories such as “charitable donations”, “medical expenses” etc.

When tax time rolls around, you will be able to open these folders and find all the documents you need at your fingertips. Reuse the empty tax receipt folder/folders for the next odd/even year.

If you have a small business, set aside a single file drawer or a desktop file unit with tax folders specifically labeled for your business expenses such as supplies, bank statements, invoices etc. Be sure to put copies of your utility bills here as well if you deduct a portion of your home expenses for office use. Set aside time at each month end to reconcile your books to ensure you have all the receipts/supporting documents you need.

If you are notorious for losing track of vital expense receipts such as cab fare, restaurant tabs etc. Consider keeping a Ziploc bag in your briefcase or purse. Use the best-before strip to write the current month. As you travel, you can slip all your expense receipts into the bag.

2. Set a specific date and time to deal with your tax return. This is one task that will not get easier the later you leave it. Make an appointment in your calendar for at least a half-day to deal with your tax return and keep that appointment. You may also want to consider hiring someone to do your tax preparation. Not only will this simplify your life but often professional tax preparers will be aware of additional deductions/credits that will more than pay for their services.

3. Always make a copy of your completed tax return, attach all supporting documents and file into a single folder in your tax archive.

To create a tax archive, label 10 hanging file folders “TAX YEAR 0”, “TAX YEAR 01”, and so on through “TAX YEAR 09”. Copies of completed tax returns along with accompanying documentation should be placed in the appropriate year ending. For example, your return from 2000 would be in the folder labeled TAX RETURN 00.

Place these folders in a file drawer or file box marked Tax Archives. You can reuse each TAX YEAR folder every 10 years by automatically removing the documents left over from ten years past. The old documents can be shredded unless your accountant has advised you to keep your tax files for an extended period. In that case, you can create a longer term storage box with folders for each decade i.e. “TAX DECADE 00-09, 10-19 etc. and transfer old tax returns in the appropriate decade file.

For a ready-made filing system try the FreedomFiler kit. This kit comes with a simple set of peel-off labels for hanging tax files, plus hundreds more specific labels for other files, and plenty of blank color-coded labels to customize your filing system to meet any household or home business need. Click on the ad below to order your kit.

For assistance with organizing your tax files or dealing with other personal or business filing issues consider getting professional input by hiring a professional organizer. To hire the services of Joan Kosmachuk, please email your request to info@simpleeffects.com or call 617-784-0707.

If you found the information in this newsletter to be of value to you, please feel free to forward it to your friends and colleagues; you'll be helping them simplify their lives.