Over the years, I’ve helped a few clients search for information for multiple prior years’ tax returns so they can have their tax preparer submit the returns.
The main reason they delayed? They didn’t have the papers they needed. Often because of situations beyond their control, but not always. Sometimes it was simply because they didn’t have a system to corral those documents as they arrived.
Do you have a system set up so tax time is easy?
The system you want is one that makes it easy for you to use. A lot depends on how complicated your financial situation is and how many papers you have. Whichever you select, and whether you receive paper or digital copies, be on the lookout in January and early February for envelopes labeled “Important Tax Information” or emails with similar notices. Put them into your system immediately.
Try one (or more) of these suggestions.
- A single hanging file folder, manila folder, or envelope labeled “Papers for 2024 (or appropriate year) Taxes.” This works if you don’t have many papers needed for your tax return. A colorful folder or envelope is helpful so it stands out.
- A clear plastic box large enough to hold 8 ½ x 11 papers (9” x 12” or larger). Label it “Papers for 2024 (or appropriate year) Taxes.” Assuming it’s large enough for one year’s worth of tax-related income and expense papers.
As you have financial papers during the year that are income or deduction related, toss them in here (after, of course, paying the bill or doing whatever is necessary with that paper). In January, as all those envelopes labeled “Important Tax Information” arrive, open them to verify the information looks correct, then toss them in the box. - A plastic file box, 13” x 17”, with a lip to hold hanging file folders. About a dozen hanging file folders, labeled Income, Deductions, Bank Statements, Credit Card Statements, Charity Receipts, Medical Expenses, whatever is appropriate for your situation.
- Manila file folders and an expandable file folder to hold them. Label the same as in #3.
- If you’re digital, create a folder “For 2024 (or appropriate year) Taxes” and move all digital documents there.