by Roland McShane

Created on: February 10, 2009   Last Updated: March 28, 2009

The first week in April my favorite client exclaims, "It's tax time! I have to pull my checks!" Rarely is her mad rush necessary. Why make tax time more stressful by entering tax season unprepared? Is there a way to organize a year's worth of paperwork to make filing your taxes simpler for you and your tax preparer? If you follow these simple suggestions, you can.

Most of the paperwork needed to prepare common tax returns you receive in the mail. Banks provide you with statements showing interest you earned or paid. Employers provide you with earnings statements (W-2s). Brokerage firms provide you with forms showing dividends paid to you and stock transactions. You don't need to keep every pay stub from the year to file your taxes. But it is a good idea to keep the final one to compare with your W-2. You do not need to have copies of every check you wrote to charity. But you do need to have a record of contributions which the charity should send you each January.

If you can't find a shoe box then use a regular file folder to assemble all the forms and statements sent to you. These would include tax booklets from the Internal Revenue Service or from your state tax agency. Put all W-2s, statements from the Social Security Administration, interest income from banks, statement of contributions to charity, and the statement of interest paid on any home loans in the folder. If you paid significant medical bills last year, put all those receipts together into an envelope, write the total of the receipts on the outside of the envelope, and put them in your tax folder. If you paid expenses as an employee but were not reimbursed by your employer, add those receipts to your tax folder. Especially if you are paying to have your tax return prepared, write your full name, date of birth, and social security number on a sheet of paper. Also include that information for anyone else on your tax return such as spouse and dependents. An experienced tax preparer will be able to use the information you have put together in your tax folder to complete most tax returns. If you are not sure if something is deductible, ask your tax preparer.

Once you know what you actually need, why not get organized for next year's taxes too? Have an envelope where you can put all your medical receipts as you pay them throughout the year. Miles you have driven to the doctor or while doing charity work are often overlooked deductions. Have a tax notebook handy where you can jot down medical or charitable mileage throughout the year and keep it with your other receipts. Since you already know which documents will be sent to you, don't waste time keeping up with paystubs or monthly mortgage statements. This time next year, you will have a complete tax file with everything you need. Plus, you won't have to pull out your hair or your checks!

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