Guys, tax season is stressful, but organizing your tax records doesn’t have to be. Here is a simple system I use to keep my tax records organized.
Step One: Supplies
You will need:
1. A Water Tight Storage Bin
2. A Label Maker (a sharpie and post-its will do the trick)
3. Nine Large Clear Envelopes
Step Two: Organizing
My accountant recommends keeping the past seven years of tax records including relevant receipts. Sort your returns and receipts by year and store all of the documents from each year in a large clear envelope. Label by year and store all of them in a water tight bin with the most recent on the top. These archives can be stored in a safe spot in your basement, garage or high closet shelf since you shouldn’t need access to them very often.
At the end of this sorting process you should also come across documents or receipts that are no longer necessary. (Consult your accountant if you have questions about what to keep). Gather those in a large envelope labeled “shred” and make sure to add “shredding” to your to-do list for the week. Finally, label the last empty envelope for the current year, and store it in a convenient spot so you can add receipts and records throughout the year. Mine is at the very front of my filing cabinet in my office.
It feels really good to know exactly where all of your tax records are and have them clearly labeled for easy access.