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How to Organize Your Tax Documents

by Ryan Guina

Tax season is officially upon us. By now, you have probably already begun receiving your W-2s, 1099’s or other tax documents in the mail. That means there is no better time to get started with your organization to make filing your taxes a little easier this year. I’m going to walk you through the process my wife and I use to organize our tax documents for tax season. This is actually a year round process that involves very little upkeep – just a couple manila envelopes stored in a safe location.

How to Organize Your Tax Paperwork

how to organize your tax documents

Don’t wait until the last minute to organize your tax files!

Taxes are one of my least favorite things to do. I don’t mind paying taxes and supporting public works – I just don’t like filling out the paperwork. One of the most important things you can do to make preparing your taxes easier is to keep your papers organized.

Whether you do your taxes yourself, or hire an accountant, keeping your documents organized will reduce errors and the time needed to complete your taxes (essential if you hire someone!). I recommend trying to keep everything in one place, such as a binder, folder, large manila envelope, file folder, or tray on your desk, depending on your needs. Because I have a business, I keep my individual and business tax paperwork separate, even though it eventually all goes on the  same tax return.

Organize Your Tax Documents Year Round

Our individual taxes are fairly simple, and we receive few tax documents throughout the year. The most common tax documents we receive are receipts from charitable donations, which we keep in a manila envelope labeled “Tax Deductions.” We use an inexpensive pocket folder to organize the rest of our tax documents once our W-2’s, 1099’s, and other tax documents start rolling in near the end of January. I place all income on one side of the folder, and all deductions and expenses on the other side of the folder.

My business taxes are a little more complicated as there are more expenses, deductions, receipts, and other papers to track. I receive business documents year round and file them as I receive them. Each time I receive a new document I file it into a simple manila envelope, where it will remain until tax time. I find it easy to keep my business tax documents and papers in three folders – income, expenses, and business/tax documents. Keeping everything in separate envelopes makes it quick and easy for me to verify income if I don’t receive a 1099, itemize expenses, or find a receipt or other document if it is needed.

Based on your situation, you may find it easier to use fewer or more folders or envelopes, or just drop everything into a box until tax time and sort it out then.

Use Software to help! Many people use Quicken or Mint.com to help them organize their personal taxes. For my business, I use QuickBooks, which helps me track all income and expenses, and makes it easy to send a file to my accountant. I also use the envelope system described above to keep all the paper copies necessary for filing.

Tax Preparation Checklist

Before you sit down to do your taxes, make sure you have everything you need. This will include (but is not limited to):

  • Your Social Security Number, and the SSNs of those on your tax forms
  • Bank account and routing numbers if you pay electronically
  • Your EFTPS information if you file electronically
  • List of previously paid taxes: self employment tax, estimated taxes, property taxes, etc.
  • W-2s, 1099’s, 1098’s and related tax documents.
  • Interest paid on mortgage or student loans
  • Charitable donation receipts
  • Contributions to tax deferred retirement accounts (401k, IRA, self-employed retirement accounts).
  • Homebuyer tax credits
  • child care and education costs
  • Medical costs and receipts (if you can deduct them)
  • Other related documents

Printable tax preparation document. This is just a partial list. For a printable Tax Preparation Checklist, please check out the TurboTax – Tax Preparation Checklist.

When in Doubt – Seek Professional Tax Advice

I have had no problems using tax preparation software in the past – TurboTax and H&R Block @ Home are great options. But you may run into a tax situation that isn’t clear. I would rather err on the side of caution when it comes to the IRS and avoid paying late fees or penalties, especially now that my small business complicates my tax situation. Don’t hesitate to reach out to a tax professional if your tax situation is unclear.

Photo credit: joewcampbell


Published or updated October 4, 2012.
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{ 6 comments… read them below or add one }

1 Susan Tiner

I agree that it’s important to organize tax documents all year long — just did a similar post on getting organized.

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2 Tyler WebCPA

You sound like a CPA’s dream client! Do you track expenses on Quicken or some other money management program? I think that one of the big stresses with preparing tax returns, besides writing the check, is that most people really have looked at their finances all year and scramble to get everything ready, chain consuming cappuccinos and swearing prolifically the whole time.

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3 Ryan

Tyler, I use Quicken for personal finances and QuickBooks for my business. I can download a backup copy of each and give them to my accountant. I also provide an organized copy of my documents (and keep a Zerox copy for myself), and generally have a good idea of how much I will owe or will receive in return. I ask a lot of questions before, during, and sometimes after the process so that I understand everything that goes into my return, why certain forms are used, etc.

My goal is twofold: to understand everything, and to make my account’s job easier. The first, because it is good business sense to do so, and the second, because making my accountant’s job easier means that it takes less time, and my accountant is more willing to spend time with me when I need it. I’m not her biggest paying customer, but we’re on a first name basis. ;-)

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4 Personal Finance Student

Well, for me, organizing my tax document is a necessity. Having it organized is easy to recollect them at once. Also it’s better to ask help from a CPA. And that could be a good idea.

Excellent post! Thanks!

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5 MoneyNing

Especially if you have a business, it’s imperative to keep tabs all year long or you will miss something come tax time.

If you think about it, missing just one tax deductible expense is VERY costly, and before you know it, you could actually hire part time help to organize them for you.

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6 Dr. Timothy Lawler

I completely agree with organizing your documents year round. It becomes quite easy once you make it habit, whether it be every day or once a week. Also, having good accountants and/or lawyers on your side is imperative. As you pointed out, they can give you advice that will be worth more than you could ever imagine, making their fees seem like a bargain. Keep up the good posts!

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