The Clutter Coach

 

How to Organize Your Taxes

Cynthia EstesBy Cynthia Estes, Mountain Democrat columnist
Reprinted with permission of the Mountain Democrat, Placerville, CA

OK, Christmas is over, the decorations are nestled snug in their beds and the company has finally left. Now you can rest, right? No, because now we go from Christmas time to Tax time! Is it possible that the powers-that-be decided that we had too much fun during the holidays, and we must be punished by immediately bombarding us with tax season?
 
Nevertheless, April 15th is coming. Whether you cross your fingers and do your own taxes or employ someone who actually knows what they are doing, you’re going to have to start somewhere. I may not be able to make this year’s tax season painless, but work with me and we’ll get ready for this year and prepare to make next year a breeze.  Before I lead you to believe that I may know something about taxes, let me assure you that I am in no position to give any tax advice (although I did get audited once and got a refund). So please see a tax professional, call the IRS or visit their website or try one of those tax software programs, as it walks you through the process step by step.

Start early
Hopefully, you’ve kept all your receipts in one place. If not, It could take some time to find and drag out the shoeboxes, paper bags or whatever you’ve been (or haven’t been) using to throw your receipts in all year. If not, now, and not April 13th, is the time to start collecting them.

Gather your supplies                                                                                                                             
Get all your supplies together: one 13-pocket accordion file (you can empty it out into a manila envelope once you file your taxes and use it to start again for next year), letter size envelopes, a calculator, scratch paper, pencils, erasers and pen. Valium and wine are optional.

Find space to spread out
This is important. You’re going to be working on this awhile. The last thing you need is to have to look at it when you’re not working on it. So set up a card table in the guest bedroom or purchase one of those rolling file carts that you can roll out wherever you want, and it’s already set up for you.

Categorize with last year’s taxes
Unless you’ve never filed income taxes before (and if you haven’t organization isn’t your biggest problem), everything you need to know is on your tax return from last year. For the most part, every line that you fill out on your tax return needs some kind of documentation to back it up. Unless things have changed a lot, you can basically follow the categories from last year’s taxes. Why not use this method to make labels for each category on each pocket of your accordion file. For more categorizing help, use the Tax Preparation Checklist at turbotax.intuit.com

Those darn receipts
When it comes to income tax, you’re only as good as your documentation. So, change your thinking about receipts. Instead of just being annoying little pieces of paper, think of them as money in your pocket. You wouldn’t throw money away, would you?  If you’re not sure whether you’ll need it, keep it anyway, it’s better to have as many deductions as possible (my secret to getting a refund instead of paying at my IRS audit).  If you itemize deductions, you’ll want to have your receipts available for proof.  If storing receipts in an accordion file or in labeled envelopes is too cumbersome for you and you like gadgets, buy one of those desktop scanners made for just that purpose and scan them directly into your computer  and save them on a CD that you can store with the hard copies of your taxes.

How to store it all

One of the best investments I’ve made is a portable (if you consider 31 pounds portable) fire safe, especially made for hanging files. You can buy one at your local discount or office supply store and they make one now that is both fireproof and waterproof. I use it just for storing my income taxes. Every year, I shred the oldest year to make room for the New Year.  Just remember, should you be unlucky enough to have a fire destroy all your tax information and then get audited sometime in the future, the IRS will still expect you to produce those receipts, fire or no fire.

That burning question

No, you’re not going to get me to tell you how many years to keep your income taxes, I’ll let the IRS do that. Download publication #552 “Record keeping for Individuals” at irs.gov/formspubs.

Getting motivated

Ok, that was a trick. There is no way to get motivated to do your taxes, unless you’re expecting a refund. And if that’s the case, don’t be too smug, because all that means is that you’ve given the IRS a loan for the past year so they could make money on your money.  No matter what, I prefer to look at the positive side of this and if it’s true that the only sure thing is death and taxes, I’ll take the taxes any day!

Cynthia Estes is a Professional Organizer, owner of Uncluttered for Life, and a member of the National Association of Professional Organizers. Uncluttered for Life serves clients throughout Western El Dorado County. 

Call (530) 957-2975 for a free 20 minute phone consultation and estimate!
Email: unclutteredforlife@comcast.net