If you’re part of the 25% of Americans who submit their taxes in April, you’re probably just now wrapping up your tax return. Every year, tax day creeps up on us and catches us scrambling at the last minute. This year, think ahead and make next year easier on yourself or your tax preparer. While your taxes and files are out, start your filing and paperwork systems for next year!
Here are a few tips to make taxes easier, every year.
Find Out What You Can Toss
In general, you only need to keep your tax returns from the last three years, but check the IRS website to see exactly how long you need to keep certain documents, as some should be held onto for 7 or more years. Chances are you’ve looked up this information already and thought, “That makes sense! I’ll definitely remember that!” I know I have. Unless you’ve got a killer memory (which I don’t) or an assistant to remember these things for you (which I don’t), you’ll probably immediately forget which documents need to be saved for 3 years, which ones have to be held onto for 7 years, and what needs to enter your “Save Forever” folder.
Get around this by immediately writing down the specific dates you need to remember. If you file your items in folders, write directly on the front of the folder, that way you know exactly how long to keep the documents that are in the folder. You can either write down the date you are allowed to toss a specific document (2014 Tax Return – Toss in April 2018), or write down how long you need to keep a document (Tax Returns – Save for 3 years from date filed).
Start Your System for Next Year
Now that your 2014 taxes are filed, take time, while it’s still fresh in your mind, to wrap everything up and start your system for the next year. Round up all your 2014 tax documents and label them in a way that makes sense to you. Also, shred the documents that have reached expiration date. With those out of the way, you can start with a clean slate for your 2015 taxes.
Even if you don’t yet have any documents to file away, create the system today! I find that if I create my system early, I remember details that help for the next year, and I’m more likely to keep it up throughout the year. And, while you’re creating your new files, don’t forget to note how long you need to hold onto specific documents.
Storing many years worth of paperwork can be frustrating and take up quite a bit of space. If you’re finally fed up with sifting through receipts and saving folders of physical forms and documents, think about going digital! A great time to start is now, while you’re not rushed trying to get together taxes. And, since you’ve likely just finished going through your papers, you’ll have a better idea of what you need to store and how to organize it.
There are countless options available for digital document storage; find the solution that works for you. You can find programs that are cloud-based, create back-ups, have corresponding apps for your phone, or you can store your files directly on your computer. Once you decide what system you want to use, set-up your files and folders in a way that makes sense to you. Back in January we shared some tips to create your digital memorabilia storage; many of these tips work just as well for your tax documents!
What do you do to prepare for next tax season? Share in the comments below!
Photo Credit: Marla Kabashima