Organizing Important Paperwork Before Doing Your Taxes

It’s that time of year again that I always dread – tax time. We usually get money back so I shouldn’t dread it, but it requires gathering so much paperwork and since sorting papers isn’t my favorite activity I never look forward to it. I have a filing system that works great, when I actually use it. It’s nothing fancy, but works for us and makes gathering the papers no big deal once they’ve been filed.

I use a two drawer filing cabinet to store all of our important papers, but a file box would work too. I have folders for a variety of different categories labeled in one of the drawers (I don’t keep them in alphabetical order, but it would make it faster to find things later)! Over the years I have found that having these folders keeping me organized makes life so much easier at tax time and anytime we need to access important information. Some of the important folders I use to keep our family organized include…

  • Utility Bills – once I’ve paid a bill I mark it paid and it gets filed in here. I keep these for about a year normally. This is a super easy way to find a number if I need to call to change service or have an issue as well.
  • Credit Card Statements – after I’ve checked my statements and paid the bills they get filed here. I keep these for about 6 months because they are usually pretty easy to find back online.
  • Medical Bills – we have a Heath Savings Account so I keep all our receipts and bills for the last 7 years.
  • Bank Statements – most of our paperwork is electronic now, but I keep the initial paperwork from when our accounts were opened as well as past checkbook registers in this file.
  • Charitable contributions – any donations we make to non-profit organizations, supplies we purchase and donate or household things we give to non-profits have their receipt filed here. I also keep any newsletters and pictures we receive from the organizations/families we support.
  • Insurance Papers – I keep the most recent copy of all our insurance papers, making sure to throw out the old when the new comes. I keep a copy of our life insurance, house insurance, etc.
  • Car Papers – repair bills and insurance go here for all of our cars.
  • Pet Paperwork – I keep the most recent copy of our vet bills so I have a quick record of current vaccinations for our dog.
  • School Loan Papers – We don’t get many papers on our current loans because it’s all auto-paid with electronic statements, but I have all the startup paperwork filed here so if I need to find an account number I know where to look.
  • Check Stubs – I keep a copy of all our paystubs so I can verify if I think the year end W2 is incorrect.
  • Retirement Account information – I keep a copy of my yearly statement along with the paperwork from when our accounts were opened.
  • House Repair/Improvement Papers – I keep paid bills from our home improvement projects because sometimes they qualify for rebates. They will also come in handy when we sell our home because we can prove exactly when improvements were made.
  • Receipts – sometimes we have random papers that contain information I don’t know where to file, so they end up in this folder. Things like receipts for vacuum warranties, car seat recalls, credit reports and other random things!
  • Professional accreditation – my husband has two professional licenses that require continuing education and renewal so I file proof of all his classes and licensees in this file.
  • Tax Papers – things that I know I need each year to do my taxes are filed right in this folder throughout the year. (I.e. things like car registrations and house tax bills).

**What other files do you keep? Do you split up your files into different categories?**

Since life happens, I don’t file papers into the actual folders very often – happens twice a year in all reality because it’s not something that I can do when the kids are awake. I use a box to store the bills or documents that need to be dealt with. Once they have been paid or responded to they move to the “pile” that I stack paid bills and important receipts/papers that I know need to be filed at some point. (Once papers don’t fit in the shelf anymore I take the time to properly file them!) The place you put them is less important than making sure they all stay together. Find a box or shelf that doesn’t get disturbed, label them ‘unpaid’ and ‘to be filed’ and run with it! Once everything is in a safe place you won’t have to spend hours digging for the papers you need.

Yesterday was prep for tax day so I started by filing all the papers in my pile-o-fun. Once everything was filed properly I worked on collecting the papers we need to file our taxes this year. Here is the list I work from  to make sure I have the proper paperwork when we meet with our tax accountant:

W2 Forms – I keep all the check stubs throughout the year in a folder. Once the W2 forms come in the mail I put them right into the tax folder, but when I’m gathering up all the papers I grab the stubs too. Then you can verify that your W2 is correct by comparing it to the totals on all the stubs.

Charitable Contributions – throughout the year I put all the receipts I get for my charitable contributions (any non-profits count) into a folder. I also include any receipts for the items I’ve donated to non-profits making sure I write ‘donation’ on the top. Finally, I also include receipts for any material donations I’ve made to thrift stores. At tax time I take everything out of this folder and make sure I don’t have duplicates and verify they are from the proper year. I highlight or circle the total donation on each paper so it’s easy to find before I paperclip them all together.

Medical Expenses – you are allowed to write off medical expenses if they total up to a certain percentage of your income for the year so I recommend keeping ALL bills and receipts together. We have a Health Savings Account so we only need to bring our bank statement to our tax appointment but I keep the other papers in my file in the event we get audited in the future. If you don’t have an account I recommend circling or highlighting totals on each paper before paper clipping them together so they are easy to access for your tax appointment.

License Plate Tabs – You can write off the cost of your tabs each year so be sure to grab these. In Michigan you get two copies of the form with your new sticker so I always tear one off and put it directly into my taxes file so I don’t have to steal the one from my glovebox at tax time.

House Paperwork – if you own a home you can write off the cost of your property taxes so be sure to bring your bills along (I just file them directly into my tax folder when they come in the mail because our escrow pays them). You should also save receipts for any home improvements you’ve done throughout the year to double check if they qualify for rebates – these change often so consult a tax professional, but we’ve gotten rebates on replacement windows and replacing our furnace so don’t leave this ‘free money’ on the table!

Work Related Expenses – you can write off a portion of your work expenses, if they hit a certain percentage of your income. Save your receipts for things like uniforms, shoes, dues paid to professional organizations, mileage and expenses for work trainings/conference.

Higher Education Expenses – if you have loans from college you can write off the interest you pay each year so be sure to print off a statement from the loan company listing this amount (this is the one I always forget to find ahead of time!). If you are a current student you can write off the expenses like books and parking. Be sure to consult your tax professional for all the expenses that qualify!

 

**Disclaimer – I am NOT a tax professional and recommend consulting a professional as you prepare to file your taxes to determine exactly what you are eligible to claim on your taxes**

Once I’ve gathered all the items we need to have our taxes done for the year I toss them all in a folder and we’re ready to head to the tax professional. The hard work is already done so entering all the numbers runs quick and easy! Do you have any information I have overlooked or forgotten? I’d love to hear how you file your important papers and make filing easy!

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