Yes, it is time to do our taxes and organize our files and papers. Not many look forward to doing this task, but it’s necessary. Read the tips below on how to prepare for it efficiently.

 

Organizationally Yours,

Maureen

The Organizing Diva
Professional Organizing Services

Time to Prepare for Tax Season-Organizing Your Files

Clearing out your 2016 files

Even during this electronic age we continue to accumulate mounds of paper. The tax season is a good time to sort, organize and purge your financial papers. Go through your current filing system and shred old documents, but keep what is necessary.
Establish a permanent/long-term paper storage system that is used to archive past years’ financial papers After you put tax and financial papers into archival storage, take out tax papers from seven years ago and shred those. Then use a go-to filing system on a daily basis. I find that a metal filling cabinet with hanging file folders is best for this sort of system or you can use a clear plastic bin for hanging file folders from Staples.
Check out my video on how to clear out your papers/files and to see recommended tools.
Take out all of 2016s files and papers.
Shred after one month:paper shredder
  • ATM and bank deposit slips, after you’ve recorded the amounts in your check register and checked them against your monthly bank statement
  • Credit card receipts, after you’ve checked to make sure the item appears correctly on your monthly statement (unless you deduct something as a business expense)
  • Sales receipts for minor purchases, after you’ve satisfactorily use the item and if it has no warranty
Shred after one year:
  • Monthly bank and credit card statements (if you don’t itemize deductions-otherwise, keep with other tax documents)
  • Monthly or quarterly brokerage and mutual fund statements, after you have reconciled them with your year-end summary
  • Monthly mortgage statements, as long as your year end statement clearly shows the total amount you’ve paid in interest and property taxes over the course of the year
  • Phone and utility bills (as long as you don’t have an at-home office, use your phone for business calls (save with other tax documents), or anticipate any need to prove long term residency)
  • Paycheck stubs, after you’ve reconciled them with your annual W-2 or 1099 forms

Retain for seven years:

  • Your annual tax returnsClear File Bin
  • W-2 AND 1099 forms
  • Year-end statements from credit card companies
  • Phone and utility bills (only if you deduct any portion for business expenses, have more than one home, or have moved within the past few years)
  • Canceled checks, receipts or statements for:
    • annual mortgage interest and property taxes
    • deductible business expenses
    • child-care bills
    • out of pocket medical expenses
    • any other tax-deductible expense (e.g.: donations)
Keep indefinitely:
  • Your year-end summaries from financial-service companies -unless this service is provided online
  • Confirmation slips that list the purchase price of any investments you own
  • Home improvement records
  • Receipts for major purchases (any item whose replacement cost exceeds the deductible on your homeowners or renters’ insurance policy
  • Beneficiary designations*
Now you can set up a daily paper management system. You might want to get a professional organizer to help with this project. Once your system is in place, you need to consistently dedicate about 5-30 minutes each day to keep it running smoothly.
Only current files should be in your file cabinet. Keep long term, archival files in a cardboard or plastic box and put away. Date and label the box.
 Color Files

Determine when is the best time for you to manage your financial papers.

* First thing in the morning: It’s a nice start to the day and helps you prioritize today’s tasks.
* At the end of the day: This gives you closure at the end of the day and lets you jump right into action the next day.
* Immediately as papers enter your home or office: This is good for those who just want to get it done ASAP.**
Consider getting a high quality scanner, like the ScanSnap scanner to keep records electronically instead of keeping paper records.
*Excerpted material from Deciding Which Financial Records to Keep by Diane Harris
** Excerpted material from Time 2 Organize’s Articles on Demand by Sara Pedersen Article also based on information from Catherine M. Williams, vice president for financial literacy at the credit-counseling firm Money Management International
For help with this project, hire a professional organizer!

You can also download the Publication-552on which records to keep.

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