by Barb Dee

Created on: February 14, 2009   Last Updated: February 16, 2009

ORGANIZING PAPERWORK FOR TAX TIME

First, buy a 1 inch binder with a clear plastic slip cover on the front and back, a box of 9 x 12 manila envelopes and a three hole punch. Then write or print a title and the tax year using a 72 point font. It is helpful to print two copies, one to fit inside the clear plastic cover in the front and one for the back of the binder so it is easily identifiable when it is removed from a shelf. Next, use the three hole punch on one envelope at a time to make sure each envelope is aligned correctly. Fourth, on the front of each envelope write or fix a printed label near the top with each month of the year. Finally, add some special topic envelopes, but tailor the system to meet any identifiable need. Use the tax organizer from an accountant or categories off of the tax form to create categories that apply. Some examples might include an envelope for major receipts, any low volume small businesses, medical, charitable contributions, and tax information.

Use the monthly envelopes to put bills into as they come. Put a copy of the monthly budget on the front of the envelope if it helps. Use the special topic envelopes to keep track of special tax related categories. Major receipts are helpful to manage refunds, warranties, or establish a basis for a future business. The low volume small business envelope is helpful for launching a small business. Set up a new system to manage a small business once it is producing revenues. Keeping receipts and documents in a separate envelope will help establish whether any existing criteria for tax deductions were met without having to sort later. Charitable deductions are often made to many sources, therefore it may be helpful to create a legal envelope for each charity in the manila envelope. This may include photos of items donated or inventory lists. Tax information may be for property taxes, IRS taxes, refund statements or tax related correspondence.

Don't despair if there is a jumbled stack or shoe box full of last year's tax papers. Merely separate and lay all the envelopes on a table and stack the papers assigned to each envelope just below the label near the top of each envelope so you can keep track of what goes where. When the task is done, merely put each stack of information in its respective envelope, and then put them into the binder for that calendar year.

This will also make filing and retrieving papers a snap. Once mastered, this technique can help re-gain sufficient control over paperwork so that a computerized accounting system may be set up if one has not already been started. Another helpful tool is to scan documents and load them onto a flash drive. This can minimize the amount of paper to retain, is portable and increases security since the information isn't on the computer.

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