Being Organized for Tax Time

Tax time can be daunting if you aren't really sure what your doing or what you need to have ready. If you tackle it now and get all your paperwork in order, you'll be organized and ready when it comes around. Here are a few simple ways to keep organized through out the year, so when tax time comes around your ready to get it done.

• Have a place to store all your tax documents and receipts. If you have a simple financial life, all you may need is a few file folders, while if your financial life is a bit more complex you might need a whole filing cabinet. Have a file folder for bank statements, property tax records, retirement plan funds, etc. And remember, it's smart to keep previous tax records on the off chance that you're ever audited, so keep a folder of past tax papers as well for at least 5 years.
• Besides filing away all your paperwork, you'll need a specific folder for tax related paperwork such as W-2's, 1099's or other such paperwork you might need to access quickly when doing your taxes. The moment you get them, drop them in this folder. If you leave them on your desk or in your mail pile, they might get thrown away.
• You'll also need a specific folder for receipts or proof of deductable items such as charitable donations, medical expenses, and interest receipts.
• Planning ahead in your spending for the year helps so when tax season comes around you won't be surprised by anything that shows up on your statement. If you need, you can hire a financial consultant to help out with this aspect. An important part of being organized for tax time is having an organized budget.
• File your taxes early. You don't want to wait and sneak in just before the deadline like millions of Americans do each year. Not only will it be out of the way and off your back, but you'll know what's going on and will decrease your chances of mixing up last years transactions with this year.

Being organized will make tax time so much less stressful than it has been in the past. It will also save you a lot of time and hassle. It only takes 3 seconds to stick a receipt in a file folder, as opposed to the hours you might spend hunting for it on tax day if you don't file it away initially.