An Easy Way To Be Prepared For Taxes – Home Office Organization Tips
In homes across the US, millions of people will be spending the next few days busily getting ready for filing their taxes. They have piles of papers spread across their kitchen table as they hurry to get ready for Uncle Sam. Are you in this group of last-minute citizens? Don’t worry there is a simple filing system that can help relieve the stress. It can also help you to capture all of your deductions possible.
This is also a great system to use during this year so you will be organized for next year’s taxes. It is much more useful than letting papers pile up only to be buried and overwhelmed by them later.
Start with three folders. Label one “Income”, the second one “Expenses and Deductions” and the third one “Investments”. Go through the papers one by one and place them in the appropriate folder. For further explanation for what papers go in what folders, see the sections below.
On the inside of the folder staple a piece of paper to keep track of each source of income you have. Place every paper referring to earnings in the folder. This includes all information regarding salary, dividends, earnings, and interest. Every time you put a piece of paper in the folder, list the amount on the paper on the inside of the folder under the source it belongs to. It does not matter how small the amount. List everything. Extra income that some people forget include savings, bond redemptions and gambling winnings.
Expenses and Deductions
This section can easily be subdivided into subfolders of major categories. Place all canceled checks to charities, utility bills, statements and receipts for deductions in the folder(s). If you make any donations to charities with a credit card, place the statement or receipt in the folder. You will also put other deductions such as mortgage statements, investment related expenses, medical bills, child-care costs and non-reimbursable/employment related gas, food and lodging.
Put all statements including monthly, quarterly and annual statements from your investment accounts. Include sale confirmations, year-end overviews and dividend notices. Of course make sure to have your annual contributions to qualified retirement plans, Roth contributions and all 1099s. Keep track of all nondeductible investments including IRA contributions as well as taxable investments such as capital gains or losses.
This is an easy way to get everything organized for an efficient tax preparation taking advantage of all of your deductions. Once you use this system, you can implement it now for taxes this year and get a head start on next year’s taxes
By Kathryn La Barbera of Closet Factory Los Angeles & Orange County
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