Get your files organized for tax time

While you’re already pulling receipts, statements, and records to prepare for tax time, take the time to get organized!  Remove bank and credit card statements, utilities, investment, and any financial records related to this tax year.  Put in a white archive box (you can get from any office supply store) and label the lid with the year and put it in your basement, attic, or closet.  Then make new hanging files for the next tax year.  If you get into the habit of pulling and replacing file folders at the beginning of each year while you’re doing taxes, you will keep your files neat and purged.  Half-way through the year, also do a second purge by going file by file and removing anything outdated or that you haven’t used in a year and add it to your current year’s archive box or start a new one.  I have posted a list of the personal files I use in my home on my Web site at http://www.theproductivitypro.com/PDFs/reference_file_system.pdf.  The titles capitalized on the left side are the category names that "mark" the files that come behind it.  Don’t attempt to file everything from A-Z; instead group your files into categories that make sense, so you only have to remember the name of the marker. 

In terms of how long to keep information for tax purposes, my bookkeeper told me “The IRS states to keep your records for four years.  I recommend to my clients to keep their records for at least ten years.  Ten years from when the return was received from the IRS is the statute of limitations of when they can no longer prosecute.  Let me clarify this date.  It is not when the return was due, but when the IRS accepts the return as received (i.e., if a return was filed for the tax year 1998 on 10/31/2004 and the IRS accepted it on 11/10/2004).  Even though the return should have been filed by 4/15/1999, the IRS will start the statute of limitation period as of 11/10/2004. 

Hope this post helps as you gather information for your taxes.  Do it NOW, not on April 14!

Share:

Speak Your Mind

*