Organized: How to keep your taxes clean and simple

Speaking of taxes…..tax time is always a burden on everyone especially if you aren’t careful and neat with your receipts.

Bookkeeping is definitely an underrated task.

And you can certainly send it out to a bookkeeper and just submit a shoebox of ALL your receipts and papers each month to have someone else handle it, but why not save the cash and do it yourself?

Here’s what I do to organize my taxes (a similar system can be adapted to organize almost anything, even a company).

1. Get an accordion portfolio

From See Jane Work

If you need to organize a section in the portfolio even further, buy a set of folders that have tabs within each of them, and place it IN that section so that it subdivides the folder section.

2. Label all the tabs on your portfolio.

The major labels are:
– Income Slips (sometimes I switch jobs mid year)
– Receipts (includes Medical, Transportation, Rent, etc)
– Retirement
– Investments
– Miscellaneous

And the receipts get separated into categories like:
– Medical
– Transportation
– Charitable Donations

I also have a business so I have another folder to separate out my documents for incorporation as well as receipts.

3. Make notes to yourself

If you want to remember something you read, like that bit about how if you save your transportation stubs/tickets you can get a tax credit, write a post-it note, stick it on an envelope and make sure to remember to put all your transit passes in there so that at the end of the year, it’s all subdivided.

4. [Optional] Use envelopes to keep things together

Know how I said getting those subdividing folders is a fab idea? It is. But I go a step further and I make little envelopes with notes on the front and I put all the receipts in those envelopes, and then I sort those envelopes by categories. It’s one thing to put a mess of receipts in one folder, it’s another to subdivide them by envelopes with notes, and then to divide them again.

A dentist bill may not be the same as a doctor’s bill (lame example, but.. you know what I mean).

So when you get a bill, you can put it in the envelope and make a note on the front of it:

Doctor’s Bill for XXXXX – $54.34 – August 15th 2008

That way, at a glance, you know what the bills are for, what’s in that envelope, for how much and on what date you incurred it on.

5. [Optional] Use Excel to track it

This may be going a bit far again, but every time I input a receipt into the envelope, I make a note in Excel under another Tax tab with the date, amount and description. Then when it comes to tax time and totting up all the numbers, I just do a “=SUM()” and I’m done.

6. BE DILIGENT

This is the most important. Once you get a receipt, put it in the envelope, and make a note in the front of the envelope and slot it away right away.

It might seem like a lot of work but you’ll thank your organized self when tax time comes around and everyone is freaking out that they didn’t get it done properly, and they have to spend a WEEK to organize all their messy, coffee stained receipts.

You’ll be breezing along with a smile and say “I finished mine in 2 hours with a tax software program and my filing system”. Or less. 2 hours is a good time for me because I’m really anal about checking every amount. Then I put in scenarios of “What If I save this receipt for next year?” and so on.

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