Organizing tax records may not spark excitement with you. If you have already filed your taxes you are ahead of the game. Is that you or are your still gathering all of your tax information together? I used to spend lots of time searching for records and look for missing documents that we needed. I did a few things to streamline the record keeping process and I am sharing these tips with you.
I originally posted these tips two years ago, and they have been updated with a few additional items.
This time of year is the time to pull together tax records for our tax return. A few years ago, this step would have taken me hours to do, but now it takes very little time. I still have to summarize information and gather online receipts and bank information, but thanks to some planning, it is quite easy.
When we were first married, we did not have many records to worry about. Just our employment earnings statement and a few financial forms. But as the years went on and our family grew and we bought a home, incurred loan expense, and acquired financial assets, the need for an efficient filing system became apparent. So today I share a few tips on organizing tax records.
Tips to Organize Tax Records
I set up files for the following categories:
- Real Estate
- Financial Institutions
- Child Car
- Business Receipts
I keep all my information in file folders and file the information when it comes in. Once I started this, it became easier to do and then it became a habit. By doing this soon after the expense occurs, I save a lot of time not having to pull all the information together from a big pile or box at the end of the year.
If I receive an online receipt, I file it in my email “receipt” folder, by type. At this time of year, I print out the receipts from that folder so that I have a hard copy for my files as a back up. By setting up email folders for invoices and receipts by year, everything is right where it belongs. (For more information on how I organize email, click here).
How Long to Keep Tax Records
I keep these files in a file cabinet and hold them for seven years. I keep hard copies of my tax information for the IRS recommended retention period. You will want to keep your records for the recommended number of years for your situation. Some financial records (investments, retirement, etc) should be kept longer.
If you have a personal scanner, you can save room and time by keeping these files electronically.
Depending on your situation and organizing preferences, you may be able to fit the information in an accordion file or file box. If you do not have a system in place, now is the perfect time to start one.
Do you have your tax information organized? How do you organize your records?