The dreaded and despised tax season is just around the corner. Get a jump on tax time by creating an easy-to-use tax-filing system:
1. Use an inexpensive accordion folder, either check-sized or medium-sized, or a full-sized folder that holds 81/2-inch-by-11-inch paper.
2. Label the various sections of the accordion folder with every category you can deduct. If you're not sure which categories to include, use the categories from last year's tax return.
3. Use an accounting program to enter your expenses. As receipts come in, handle them in one of two ways: Enter them electronically, or file them in folders by month. In the future, enter all your receipts when you pay your bills or at the end of each month.
4. After you pay and enter your bills, file them behind the appropriate tab.
5. Use sturdy boxes with lids to store your tax returns and supporting documents. After labeling the box with the appropriate span of dates, store the box in an out-of-the-way place, such as your garage or attic. If you store boxes in your garage, place them on pallets to keep them dry.
Sure, the shoe-box method of throwing everything in one place seems OK at the moment, but picture yourself spending hours, days and weeks sorting through the box at tax time. You're going to have to sort your receipts anyway, so why not make it manageable from the beginning? If you handle your receipts in bite-sized pieces, at the end of the year, all you have to do is print out your expenses and hand them to your CPA or tax preparer.