Get my 5-day email funnel that generated $400,000 from a single launch

Want an email sales funnel that's already proven to work? Get the entire word-for-word email funnel that generated $400,000 from a single launch and apply it to your own business.

Yes! Send me the funnel now
15 Little Life Hacks

Keeping Track of Your Tax Paperwork

16 Comments- Get free updates of new posts here

0 0

Every year around tax time, I find myself scrambling to gather up all the little bits of information that I need to prepare our taxes. While it’s easy enough to collect up our various 1099 forms, W-2s, etc. as they arrive in January and February, we also have a number of business-related expenses, charitable contributions, etc. throughout the year. While I’m pretty good about keeping everything that we need, I’m not very good at keeping it organized. Thus, we run the risk of losing track of important paperwork and missing out on some legitimate income tax deductions.

Given that one of my main financial goals for 2008 has been to simplify our finances, I’ve recently spent a bit of time coming up with a simple, effective solution to this problem. In short, my new system is comprised of a few 9 x 12 clasp envelopes and a wicker basket. Thus far, I have envelopes set up for the following categories:

— Business expenses

— Medical expenses

— Charitable contributions

— Miscellaneous (mortgage-related paperwork, property taxes, etc.)

The basket lives on our kitchen counter and, whenever we incur a tax-related expense, I simply slip the receipt into the proper envelope and forget about it. Every few months, I’ll break out the medical envelope and claim those expenses against our flexible spending account (FSA). As for the balance of this paperwork, I’ll just let it accumulate until tax time.

I also have a “remote” version of this system that consists of a letter-sized envelope that I keep in my car for random tax-related expenditures while I’m out and about (mainly minor business-related expenses). I then periodically transfer these into the appropriate envelope in our main system such that nothing gets lost in the shuffle.

While I could probably further simplify this system — for example, by dropping down to just two envelopes (medical and other) — this works like a charm, takes virtually no time, and should save me a ton of pain at years end.

This is a guest post from nickel, who provides a steady stream of personal finance tips, tricks, and commentary over at FiveCentNickel. And since that, combined with his four kids, don’t seem to keep him sufficiently busy, he has recently launched yet another site, this time focused more narrowly on credit cards.

0 0

Related Articles

Untitled design (6)

How to pay off student loans without thinking about it

Student loans are a big kick in the face that the real world has arrived. The average graduate has $28,...

Read More
stretching

The 4 keys to finding ambition

We’re told we should just be happy with what we have… but there’s a difference between being happy ...

Read More

16 Comments

0 0
 

Leave a Reply

16 Comments on "Keeping Track of Your Tax Paperwork"

Notify of
avatar

Sort by:   newest | oldest
Aimee Jette
Aimee Jette
8 years 4 months ago

I have a basket that holds manila file folders (sorted alphabetically) and drop receipts in there during the year. They are labeled: Household 2008; Business 2008; Health… etc. Come tax time, its ready for the accountant.

trackback

[…] How do you capture receipts and other tax documents as you go? Let us know in the comments. Keeping Track of Your Tax Paperwork [I Will Teach You To Be […]

trackback

[…] How do you capture receipts and other tax documents as you go? Let us know in the comments. Keeping Track of Your Tax Paperwork [I Will Teach You To Be […]

Anthony StClair
8 years 4 months ago
We use 2 envelopes for receipts, and it works well for us. They’re kept in a desk tray that holds all the current month’s financial paperwork (anything that involves a monetary transaction). In a filing cabinet, individual hanging files hold info, statements and receipt envelopes for each calendar month in the year. The day’s receipts go from notebook, purse, pocket, whatever, into one of the envelopes. For the envelopes, we have CURRENT-MONTH Receipts (non-tax) and “CURRENT-MONTH Receipts (taxes)” . Charitable donations, copays, office supplies, etc. all go into the “taxes” envelope. At year-end, we pull all the “taxes” envelopes and… Read more »
Joe C
Joe C
8 years 4 months ago

Hi Anthony–thanks for the great tips. I saw from one of your links that you can get mileage deductions for transportation to and from charity work. What sort of documentation is required in order to take advantage of these deductions? Also, if I payed a toll in cash and did not get a receipt, is it possible to deduct that as well? Thanks.

fivecentnickel.com
8 years 4 months ago

Joe: Anthony didn’t write the post, I did. It’s sorta convoluted… This is Ramit’s site, but he’s out of town. My name is ‘nickel’ and I filled in for him today. The site where you found the tax info (fivecentnickel.com) is actually my site. As for your question, it’s generally recommended that you keep a mileage log with dates, detsinations, and mileage. The toll question is a good one, and I’m not entirely sure. Of course, if you don’t get audited then it’s a non-issue. But if you get audited, I’m not sure how you’d substantiate the deduction.

Fiscal Musings
8 years 4 months ago

I just keep a general folder for all tax related paperwork. I also just started keeping a mileage log in the cars for any deductable miles.

Joe C
Joe C
8 years 4 months ago

Thanks for the tips Nickel and sorry about the confusion.

On the road to HyperInflation
On the road to HyperInflation
8 years 4 months ago

BTW – the archive of your blog is not currently working (03/13/08).
I was trying to pull an old article I happened upon, but it was only bouncing me back to the front page.
Just FYI.

Ramit Sethi
8 years 4 months ago

Thanks — fixed now.

trackback

[…] Keeping Track of Your Tax Paperwork – Especially for those of us with pockets full of receipts for costume purchases, etc. […]

trackback

[…] Keeping Track of Your Tax Paperwork – I Will Teach You To Be Rich […]

Carter Kirkwood
8 years 4 months ago

I use VaultStreet.com. It automatically collects and organizes my tax records for me. Plus right now it is free. So what can I say “Priceless.”

Ramit Sethi
8 years 4 months ago

Carter (who I note is from VaultStreet.com), it costs $199/year to simply collect and store your financial documents? Are you serious?

Carter Kirkwood
8 years 4 months ago
Ramit, Thank you for your response. You are correct that I am with VaultStreet (sorry I did not make that explicit, I am still learning the etiquette of posting comments). While the list price for VaultStreet is $199/year the service is free for a year for those who sign up now. We are also in the process of putting together a version of VaultStreet that will be free long term, but that has not yet been implemented so I do not yet know the details of what that will look like. I would be interested to know if you have… Read more »
trackback
8 years 3 months ago

[…] Keeping Track of Your Tax Paperwork […]

wpDiscuz