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Thursday, June 09, 2005

How To Organize for Tax Time

By Sheri’ McConnell

The words “simple” and “tax time” have probably never been uttered in the same sentence. Well, not until now at least. The key to a stress free tax season is being organized all year-round. Trying to organize a week before or, God forbid, the night before April 15th is setting yourself up for failure.

Why You Should Organize for Tax Time

Organizing for tax time helps you avoid misplacing important receipts and documents. Your stress level will be lower because you won’t be rushing around at the last minute trying to get to the tax preparer and/or post office. Being organized for tax time also helps you save money because you are more likely to keep track of deductions if you have a system and you won’t be charged a higher fee for having your tax preparer go through your piles of receipts.

How and What To Organize for Tax Time

The only way to organize any object is to assign a home to it. Designate a filing cabinet or storage bin made to hold hanging folders for your year-round paper storage. Create folders for receipts, credit card and bank statements, etc. You will make a folder for anything you spend money on and need to keep track of for tax purposes. Have a filing schedule. I usually take one day a month to pay the monthly bills for my three businesses and to do all my filing. During the month, I put all my documents into one of two places until my filing day. This keeps everything organized with very little effort. I have one folder designated for current bills to be paid and then a lateral shelving unit that I stick everything else in for all three businesses and for my personal documents. No matter what, no less than once a month, I file everything from the shelving unit into my filing cabinet in the appropriate folder.

Now, where do we file our papers? Each year, you should designate a large accordion envelope or section of your filing cabinet to your tax papers. Some of the tax papers you will be filing will include your W2s, 1099s, mortgage interest statements, bank interest statements, real estate tax statements, investments statements, and receipts for charitable donations. Most of the papers/receipts you will file will fall into the following categories: salary, real estate, medical, childcare, and investments.

How Long Should I Keep My Financial Records

First of all, make it a habit to throw away as much as you can that you don’t need to keep like the envelopes that come with your statements, your ATM slips after they have been recorded in your check register, credit-card slips (don’t forget to shred them if they show your credit card number), utility, phone, and cable bills after you have paid them.

Now, on to the documents you should hang on to. Hang on to all monthly statements of financial accounts (bank, investment, etc.) one year until you reconcile them with the year-end statements. Hang on to federal and state income tax returns and related receipts and statements for at least three years. One investment company recommends keeping all tax returns and related information for six years if there is a possibility you may have under-reported your income by 25% or more. When it comes to business equipment or home improvements, you keep those records as long as you have the item (printer, house, etc.).

Simple Tax Time

Everyone has a different financial situation and these tips are offered as guidelines to simplify tax time. Being organized at tax time and year-round should allow you to lead a calmer life and to have greater control of something that you can and should plan for. I hope a few of these tips helped and that you have a stress-free tax season as we head into the next year.


Sheri' McConnell ( is the President and Founder of the National Association of Women Writers ( and the InfoMarket Network ( She helps women writers and entrepreneurs discover, create, and profit from their intellectual knowledge! Sheri' lives in San Antonio, Texas with her husband Seth and their three children-ages 10, 9, and 5. Contact her at or her toll free number at 866-821-5829.

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