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Organize your tax records

It’s tax season, and either you’ve already filed your taxes, or you will be doing it soon.  This provides the perfect time to organize your past documents, get rid of out-dated information and create a system to store tax documents for the current year.

Organizing Past Tax Documents

Start by going through your past tax-related documents and sorting them into piles by year.  Shred documents that are over 7 years old unless they still relate to your current situation.

Now that you have separated your documents, create a filing system to keep your records easily accessible. We recommend using an expanding file folder to contain all past tax documents, using each section to represent a different year. Make certain each section is labeled with its corresponding year, also labeling the outside of the folder similar to “Past Tax Documents”.

Organizing your tax records this way allows you to easily access your files in case of an audit or for future reference when planning budgets or checking past investments.

Organizing Current Tax Documents

Sort your receipts, bank records, deductions, pay stubs and any other documentation for this year’s taxes.  Using an expanding file folder, create a section for each of these items and label accordingly.  Label the outside of the file folder similar to “Current Years Tax Documents”.  Over the course of the year, continue to file your relevant documents in this folder.  At tax time next year, simply grab your folder and you’re ready to go!

Once you’ve filed that year’s taxes, make sure to remove all items from the “current” folder and add them to your “Past Tax Documents” folder – labeling the year they represent.

 Keeping your tax documents organized can save you a great deal of time and frustration.  Also, if a loved one ever has to help you with your finances – due to old age, an accident or other situations – it will make the transition simple and effective.  Inform your significant other or a close family member where important documents, such as financial and tax records, are kept in case such a situation arises.

Once you follow these steps, you will have a system in place for keeping your current and past documents well organized – making filing your taxes each year that much simpler!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

 

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