Preparing for Taxes doing your Taxes Tips to Prepare for Taxes Tips for next Years Taxes

If you are using the shoebox method of record keeping, then maybe it is time to get this year organized and get ready for next year at the same time. My taxes aren’t that complicated, but I am amazed at the number of receipts and items the family gets every year. Here are a few my tips.

Throwing every receipt you ever had into a bag or shoe box may have worked when you filing a 1040-EZ form where you only worried about your W-2. But life has gotten more complicated. The best method of keeping track of everything is to get it into a place where it can be easily found. There is nothing more maddening than reviewing your entire year through receipts. If nothing else it reminds you how much money you spent on things you can’t really remember where they are now.

In our electronic world, paper still rules. You get stubs from your property tax, you get little pieces of paper from donating to a clothing charity. The Scouts sends you a letter thanking you for your donation. You may only have the returned check from a quick donation at work. And still there are receipts from the grocery store or the hardware store. Quickly these little bits of paper add up and become an unwieldy mess that you just chuck into a box with the attitude you will sort through it later. It’s now later.

My first tip is to take that box and review each paper. If it has nothing to do with taxes, dispose or save it as you wish. Purchase an accordion file with at least 6 pockets. You will need to label Income, Interest/Dividends, Deductions/house, Deductions/medical, Deductions/donations, Misc. You might need more if your personal situation requires it (in my case, I have business expenses). Sort your current items into these pockets.

I also use Quicken to record my charge cards and checking account information. One of the things I do at tax time is run a report sorting last years receipts by the payee and look down the list. It is very useful to find a hidden deduction or two. Write them down on a piece of paper and put it into the proper pocket.

A another great tool to help you organize is to use a tool like Turbo Tax. It has two advantages in that it will help you jog your memory about expenses you paid in January of last year that seemed to slip by you. I almost forgot about property taxes one year, but caught it when I started to do my own taxes.

Next year does require a little more discipline to get and put those tax items into the proper pocket. But come next March, you will think you are pretty smart.