In the Spirit of Tax Season: Organizing Documents

During the year: I have one big file called Taxes 2013. If I write a check to charity I write it on the inside folder with the date and put the receipt in the folder. If I have a medical expense, I write it on the insider folder and put the receipt in the folder. When my homeowner's dec page comes in, it goes in the tax folder. Any tax item goes in the folder.

I run all my expenses through a bank account and a credit card. They both send me a statement at the end of the year with the whole year's expenses listed by category. I take a highlighter to the relevant tax items and file it in the tax folder. I order a prescription summary from CVS and put it in the folder.

My hubby keeps a separate file folder for rent house repairs and purchases and income.

Next year, I am balancing my bank account and credit card with Quicken so I don't even have go back through my year end statements.

When the W-2, mortgage 1098s and 1099s come in at end of year, they go in the folder.

At tax time: I group them...Income Items/Expense Items. I clip the W-2s and 1099 div/interest income items to the left side of the folder.

Inside the folder goes the expenses in the following order:

I put all our rental income/expenses together. Then I put any itemized deduction expenses together. Lastly, I have daycare receipts, homeowner's dec page, and LA Start contributions.

That's how I turn the sucker in and I still have to chase some document down before its over.

When taxes are done: I file all supporting docs with the copy of the return sorted by year. I've kept every year since we've had a rental because I just know I'm going to need to pull all those one day when we sell.

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How long have you been doing this?

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Since 2008. We did our own returns online before we married. I kept the copy on the computer then and didn't keep the supporting docs. When we married we started using a CPA. They print us a copy and I just file it with the supporting docs. I don't even keep a pdf copy even though it is filed online and emailed to us.

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How often do you need to go back through old returns?

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Never had to yet. I think you can be audited on 3 years of tax returns, but I just keep them all.

I'm self employed, so mine's probably a little different.

I have an excel spreadsheet with 13 tabs- 1 for every month and 1 for a summary/totals of everything. For each month, I have my gross pay, mileage reimbursement, copies reimbursement, and any expenses that are written off for that month (office supplies, postage, business dinners, etc). The summary tab shows my gross pay, subtracts all reimbursed expenses, and the adjusted gross. Then, all my write offs are listed by company (Office Depot, USPS, etc) and totaled at the bottom. When it's tax time, I print off the summary and hand it to my CPA. I keep the receipts in an expandable folder, and start a new one every year.

I suggest you talk to your tax person for all the expenses you need to keep for your line of work and if you use a home office.

I throw alot of useless receipts away that Im sure wouldn't fly. But I work in a couple of biz catagories where alot of things I can wrote off, you may not be able to.

Example: If I'm a kite designer, I could write off all the new kites I buy as research. But the ordinary person can't write a kite purchase off.

Save em all if you need to, you can always erase em or use them in knowing what you have spent your $$ on. Most softwares or spreadsheets already know which catagories would be consdered expenses.

Just the ones that I will have to reference/provide in the event of an audit, i.e. expenses I was reimbursed for and expenses that I wrote off.

I can generally limit mine to an envelope size accordion folder that I keep in the top of my closet. I don't keep up with any other receipts.

Every time I close out a year I tell myself I'm going to get more organized...it never happens

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Before each quarterly estimated tax payment is due transfer the information from the documents in the ziplock bags to a spreadsheet that simulates your tax return.

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I haven't thought of that. I have one spreadsheet that I use solely for my budget and tracking my spending. It would be nice to create a tab that simulates the tax return.

I throw it in a box. In March I bring the box to my accountant. That's why I never get headaches.