At
this time of year when taxes are due it always makes sense to review what
changes we can implement to make the process easier for the upcoming year. With the 2011 tax season drawing to a close
you may want to review your paper system for 2012. Were there documents you searched for? Did you spend extra time compiling numbers
you needed? Even though a few of these
tips are repeats from previous blogs they are worth looking at again:
-Whether
you use a hanging file with interior folders, a divided tote or a binder with
pockets, you should have one place where all your tax related paperwork goes
throughout the year. Keep the paperwork
somewhat accessible so you can add documents as they arrive. Leaving tax-related paper out to be filed at
a later time can result in the documents never making it to the storage
area.
-While
this list is not exhaustive, here are some sub-categories you could have and
the documents within them. If you run
across another sub-category make a folder for it: “Charity” for any non profit
donations you make, “Medical Expenses” for any health expenses you can claim,
“Tax Documents” for all end of the year
statements (financial statements, 1099-HCs, 1099s, W2s, etc), “Income” for
paystubs, rental income, prizes etc.
-If
you do not have Quicken or Quickbooks it can be helpful to maintain a
spreadsheet throughout the year. As you
incur an expense it can go on the spreadsheet in a specific category. At the end of the year you will have the
total number for each area and not wasted time reconciling receipts. Examples of good expenses to track would be
medical, education, mileage and travel etc.
Of
course all of the above are just guidelines and a basic structure. Take some time to properly set up for 2012
and make it your own!
