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The Not-So-Taxing Tax Season

28 Mar 2018 12:49 PM | Birdie Brennan, CPO®

No one enjoys the process of filing taxes. But for many, this time of year can be especially daunting if paper keeping is an issue in your home. Finding documents, gathering forms, and keeping records can be a terrible triple-whammy for the paper challenged.

This is also true for digital records. Information, whether in paper or digital form, can be easily misplaced or saved in haphazard ways that create useless digital piles. 

Well, we see this time of year as a great way to get focused on the paper that is important, remove what isn’t, and create a simple system that will keep you on track throughout the year.

We start with a simple file very humbly named “Current Tax Year.” This file will be the gathering place for tax-related documents collected throughout the year, and can take digital or file folder form. Think of it as a simple drop system that you barely have to think about until the items need to be called upon.

By the way, digital files will always be the recommended end home for your paper files. But throughout the year, there is nothing wrong with having a collection place for those hard copies.

If you do not itemize, this is almost all you need. But for itemization, we take a few more steps to separate these basic tax categories:

  •  We like keeping receipts in envelopes separated by month to capture the everyday non-specific purchases.
  •  We create a file for each area of itemization. For example: auto expenses related to business, liability and other  business insurances, legal fees for business, marketing expenses, phone records, etc
  • For those whose healthcare expenses factor into filing, we separate these as well
  • For those who use accountants or CPAs throughout the year, we create a Tax Preparation file
  •  Investment files are necessary if you have retirement accounts and other assets with dividends
  •  It is also a good idea to keep a Banking and Credit Card file for those summaries that help show proof of itemized transactions

There may be other categories, but these are the basics for most.

This system is easy to implement for the new year, but if you are in the middle of paper stacks of every type, you need a clean-up plan too. We approach clean-up with a sorting strategy. First, have a receptacle for Recycling, have a plan for Shredding (either a receptacle or a shredder that is ready on site), and have a bag for Discards. You will find that most of your paper will fall into these categories. For the 10% or so that needs to be kept, you can make your own categories based on what remains. Then decide if you want to store your paper in digital or hardcopy form.

There are so many great digital document systems, we hope that you might take a serious look at some of the products available. We have used Neat, ScanSnap and Evernote. And for cost tracking, there are any number apps and software for tracking spending and mileage that can keep your purchase records categorized paperlessly throughout the year—a real plus!

So like the commercial says, don't just get your taxes done, get your paper work won! We are here to help make this year your best paper year yet.

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