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Tax Bookkeeping

January 26th, 2011 at 10:57 am

I should probably have posted about organizing your tax information prior to suggesting you look for the least expensive way to file (yesterday's post).

I keep a manilla file folder for each tax year. The year is written in permanent ink of various colors to make it more fun! I make the folder at the beginning of the calendar year, so that if something tax related comes up there is a place to file it. Receipts for donations of cash or household goods get put in there throughout the year.

As tax season approaches, now, I write on the inside cover what documents I will need to file our taxes. I use the prior year return to help me know what those items are. As we receive the tax forms in the mail or online (you do know many tax forms are online, right?), I simply checkmark the item off. Once all the items are received, I know that I'm ready to do my taxes. Or, if you don't do your own tax return, you know that everything is ready for your preparer.

After I efile, I print a hard copy and save the return on our hard drive. I kept the hard copy with all the supporting documentation in the same file folder. I even go so far as to put the documentation in order of how it is entered on the tax return. Does anyone else do this?

I keep the prior year and current year folders in my everyday file drawer. The older ones I kept in a file drawer in our basement. I have to say I have not ever thrown a return away. It is an interesting documentation on income. I'm sure I will at some point, since I know I can't be audited back to the previous century!

How do you handle your tax bookkeeping?

3 Responses to “Tax Bookkeeping”

  1. MonkeyMama Says:

    I just have a manila folder (labeled by year) to put all my tax documents. Very similar!

    Since I have a very simple tax situation, I don't need any tax forms to file my taxes (at current). Somewhere around 12/31 I print out year-to-date reports in Quicken for mortgage interest paid, property taxes, charity, interest income, etc., and use my 12/31 pay stub to file.

    I e-file, but keep a paper and an electronic copy. I put it in the manila folder and file away, same as you.

    I was just thinking I should go back and shred some older tax returns (I never have), but I would keep the 1040 and maybe my W-2s. They don't take up much space, and is an interesting history. There are probably a lot of useless supporting documents I could shred.

  2. Savings Queen Says:

    I love your organization. It's simple but effective. Maybe this year I'll do better. My system is to have the file folders lying in a kitchen drawer, but then when it comes time to "file" a tax document or receipt, I just throw it in the drawer...NOT very effective. I LONG for a kitchen drawer that has room for standing file folders....makes no sense that they don't seem to have them.

  3. SnoopyCool Says:

    I just wanted to add this about filing taxes:

    From January 1 to February 15, it is illegal to file on a last paycheck stub for the prior year.
    "If you do not have W-2's after Feb 15, the IRS allows you to use information from your last paystub to fill out a Substitute W-2. When you sign the form, you are also certifying that you tried to get your W-2 but couldn't."

    I have a small business so I keep everything in software that I have for that business and also in an Excel spreadsheet. I have a file in my filing cabinet where I put everything else until it's time to file.

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