finance · organization

how to stay organized so you can file your taxes hassle-free

Since tax season is coming to an end (you did file your taxes, didn’t you?!), I thought it’d be an appropriate time to do a series on the bane of my existence: paper clutter.

Tax season is a stressful time for everybody. If filing your taxes left you on the verge of an emotional breakdown, drink some calming tea and read on for some of my favorite tips that will make filing your taxes smooth-sailing next year.

1. Keep a file folder labeled “Taxes” and put all of your tax documents for the current year in it.

Okay, this one’s pretty simple — but sometimes simple is best. One-hundred percent of people agree that it’s easier to file your taxes when you can find all the damn paperwork you need to file your taxes.

As documents arrive from your banks and other entities, throw them in your file folder. Don’t underestimate the importance of having everything in one place — it could save you hours when it finally comes time to file.

If you own your own business, remember to keep a separate file folder for business tax documents (including receipts for business expenses).

2. Keep a list of all the documents you used to file your taxes so you can reference it next year.

Savings accounts, investment accounts, student loans, W-2s … it can be difficult to keep track of all the documents you use to file your taxes, not to mention where they come from.

Save yourself some time and keep a list of the documents you used for this year’s taxes, as well as the institution they came from, so you can reference it during next year’s tax season. Also keep a record of accounts you open and close throughout the year and loans you take out or pay off, so you’ll know if you need documentation for any of them when tax season rolls around.

3. If you itemize deductions, keep a manila folder for your doctor’s bills.

If you itemize deductions when you file taxes, you’ll need to list all of the deductible medical bills you’ve accrued for the entire year. A manila folder is a great place to store all medical bills and receipts for safekeeping, once they’ve been paid. I file my medical bills chronologically, which makes it easy to pull out a bill if I need to reference it.

The key here, just like with most things, is to immediately file the bill in the correct place, rather than letting it get lost somewhere in your house/mailbox/to-do pile.

Note: If you have a Health Savings Account (HSA), I’d recommend keeping any medical bills charged to this account in a separate folder. Since the money in your HSA isn’t taxed, you cannot claim any money spent from this account on your tax return, so it’s wise to keep them separate from your other, tax-deductible medical bills.

4. Create a “Taxes” folder in your email account.

Screenshot of Gmail mailbox tax folders
Having a designated tax folder in my email allows me to easily collect important tax documents.

At the end of the year, I start getting emails from the entities that handle my money, informing me that my tax documents are ready to view. Having a designated tax folder in my email allows me to immediately move over any of these emails so — again — they’re all in one place for easy retrieval.

If you can manage it, it’s even better to access and print those documents right away and put them in your physical files. But if you have to do it later, having a designated folder for these emails will keep them from getting lost in the black hole that is your inbox.

A couple tips for after you file your taxes…

1. Toss the documents you no longer need.

Most experts agree you only need to keep your tax returns for the previous seven years, in case you’re audited by the government. Once you file your taxes for the year, throw out (read: securely shred) your oldest return. Keeping only what’s required is a great way to stay organized.

If you’re unsure which documents to keep and which to toss, Consumerist provides an excellent summary of how long to hold on to certain documents that I reference often — they have a suggestion for everything from your cable bill to your birth certificate to — of course — tax documents.

2. Consider going digital.

Once I file my taxes, I scan all of my relevant tax documents onto my computer in a clearly labeled file and shred the physical papers. Not only does it help me cut down on my paper clutter, it also makes the files easily searchable via the “Search” function on my computer, should I ever have trouble finding them.

Screenshot of tax documents folder on Macbook Air
I label my files with the type of document + the institution name. I file my taxes online, so I also keep copies of my federal and state tax returns in this folder.

If you opt for this method, I’d highly recommend backing up your data to the cloud or an external hard drive, in the unfortunate event that something tragic happens to your computer.

Even if you’re a technophobe and would rather stick to physical paper files, I’d still recommend scanning your documents to your computer in the event that your filing cabinet catches fire or is chewed to pieces by a hoard of particularly aggressive tree squirrels.

***

So there you have it — my tips for staying decluttered and destressed during tax season. Do you have an awesome filing system or a great tip I didn’t mention? I’d love to hear about it in the comments below!

Next week, I’ll continue this series by discussing ways to manage the other paper clutter in your life (photos, anyone?). Until next time!

2 thoughts on “how to stay organized so you can file your taxes hassle-free

  1. I’m a big fan of going digital. I have a “regular” job, but also freelance, so I can deduct certain expenses. I take pictures of receipts and put then in a “taxes” google folder. It makes it easier! (and I’m lying, I hand a crumpled receipt to Mr. Sweetspot and he executes the above steps).

    Liked by 1 person

    1. Storing a digital copy of the receipt instead of the physical copy is so smart – great tip! (Even if Mr. Sweetspot is the one who actually does it 😉 ). I’ll admit that I’ve been a little behind the curve when it comes to going completely digital – for some reason, I like being able to handle my documents and see them laid out in front of me – but as I accumulate more paper, there’s no question that digital makes the most sense. Thanks for reading!

      Like

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