Many of us are about to prepare our taxes. I have put together some basic tips on how best to organize our papers and files and to know which ones to retrieve to use in tax preparation. I’m also presenting on this topic at the Brighton Staples Studio on February 11, 2020 if you’d like to join me.

These tips might be more about setting up a good filing system so you can not only easily prepare for this year’s taxes, but easily be prepared for next year’s as well.

3 Steps to setting up a good filing system for easy tax preparation

  1. Pull out all of 2019’s papers.

Put aside all the necessary papers and documents for preparing your taxes. Download a list of necessary papers for your tax papers (TurboTax_TaxPrepChecklist) if you’re unsure which ones are needed for your taxes. Label and separate all the categories.

Collect and put all these documents in clear zip envelopes like these that you can find at Staples.

Shred/recycle all unnecessary papers. Download a list (What to Shred:Keep) of what to discard and what to keep.

  1. Set up for the current year’s files.

I find that a metal filling cabinet with hanging file folders is best for organizing files and papers. Create categories with the hanging file folders and then use tabbed file folders for the sub-categories. Organize the files in accordance with how your mind works.

Tools Needed:

  • 2-drawer metal cabinet filing cabinet OR
  • Clear plastic File Box, like this one from Staples
  • Multi-colored hanging file folders with insert tabs
  • Multi-colored tab-topped folders
  • Optional: labels printed from a label maker

 

Steps to Creating Files:

Choose categories, such as:

  • FINANCIAL
  • HOME/UTILITIES (covers home insurance, water/sewer bill, property tax)
  • AUTO
  • HEALTH
  • CREDIT CARDS
  • TAXES

Choose colors for categories, such as:

  • FINANCIAL—green
  • HOME/UTILITIES—blue
  • AUTO—red
  • HEALTH—yellow
  • CREDIT CARDS—purple
  • TAX DOCUMENTS–orange

 

Label insert tabs for the hanging file folders with the above categories and

Insert tabs in hanging file folders (perhaps staggered).

Drop in hanging file folders into drawer or file bin (maybe in alphabetical order).

Label the subcategories on the tab-topped file folders in the same color, for example:

  • FINANCIAL subcategories, such as
  • Bank Statements
  • Mutual Funds
  • Roth IRA
  • Budgets

 

  • AUTO subcategories, such as
  • Auto loan
  • Auto insurance
  • Auto repairs
  • Auto Excise tax
  • Auto parking tickets/toll transponder info

File all your statements and documents in their respective folders, then place those folders in the hanging folders inside your file cabinet or bin.

  1. Archive Tax Documents.

After submitting your tax return, archive the return and the supporting documents (in a separate place, if possible) for 7 years. Bring out older (than 7 years) tax returns and shred.

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