Organizing Your Tax Documents

1/22/2021

Taxes can be a daunting task for many of us. Running around trying to collect the appropriate papers just adds to the overwhelm! Do yourself a favor and set up a simple system now that you can use all year long.

When it comes to organizing papers, the simpler your system is, the more likely you are to actually use it. Consider your purpose and end goal when deciding how to file papers. For example, if you keep receipts for several months just in case you need to make a return or need proof of purchase, you probably don't need more than a simple file, box, or envelope to keep them in. Anything more complicated than that likely doesn't give you much benefit for the time that it takes to set it up and keep it going. If you end up needing a receipt, you know that they are all there in that one spot - go flip through to find the one you are looking for. It only takes a minute. :)

White file box open with rainbow files in order: red, orange, yellow, green, blue. The file box has a lid. The file box is set on a dark wood antique writing desk. There is a pale yellow wall in the background.

Keep this idea in mind as you consider how to set up a file system for your taxes. The idea is to set up a "spot" to keep any files that will be important for your taxes. That means that, throughout the year, whenever you come across a paper that fits that category, you know exactly where to put it. At the end of the year, everything is one place, and the big step of collecting papers is already done for you.

A dark wood desk has an open white binder in it with tabs that say: Taxes, Donations, Medical.

You'll have to think about your own tax needs in order to come up with categories. What types of papers do you use for your taxes? Some possible categories include:

official tax forms from banks/employers/investments
donation receipts
medical receipts

Now designate a "spot". You could have separate dividers for each category or just one spot for all of the papers papers if you don't end up with a lot of them. You could use a file box, a binder, a folder, or even a drawer in your guest bedroom... wherever you can find a convenient open space to collect the papers!

Keeping it up:
Throughout the year, whenever you get a piece of mail or paper that is just for your taxes, go drop it in the spot. Voila! That's it!

One caveat - you may now have this type of paper coming at you virtually through email or other online accounts. You can use the same idea and create one "spot" in your computer files. Of course, you can subdivide the folder into sub-folders as needed. But save those docs into the folder as they come at you throughout the year so that you will be ready to go when it is tax time!

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White Instagram image with a green border. It says Organizing Challenge: Tax Papers

I love helping people get their papers organized and helping them come up with simple use-able systems to make their lives easier. Please don't hesitate to reach out if you'd like some organizing coaching to get you on your way!

*Note - I am not an accountant. This article is meant to give general organizing advice, not tax advice. Please reach out to your tax accountant for any advice on your taxes or finances.

From the desk of Laura

Organizing Your Tax Documents

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