Keeping Track of Your Tax Paperwork
16 Comments- Get free updates of new posts here
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.
Everyone deserves to live a Rich Life. To have the freedom, flexibility, and financial resources they need to do work ...Read More
Depending on how your interview went, you could be one follow-up email away from landing your dream job. But what ...Read More