The Daily Deduction

Fall Cleaning For Your File Cabinet

9-23-2013_hutch

It’s simply a waste of time to wait for tax season to come around in order to get organized. Many of us deep clean our homes in the spring and in the fall. Why not make cleaning out your file cabinet part of your routine?

Procrastination habits are hard to break, but once you get started, you’ll finish before you know it. Begin by following these eSmart Tax Tips.

  1. Read through your tax returns from the previous years to get a good idea of how you filed, what documents you need, and which deductions you took.
  2. List out the documents that need. I recommend arranging them by tax category: Keep all your W-2s and 1099s together for income, mortgage interest and charity receipts go in deductions, exemption paperwork goes together, and so on.
  3. Know what to keep and what to shred. According to the IRS, you should keep your tax records for as long as the following timetable suggests:
If You... Then the period is:
1.

Owe additional tax and (2), (3), and (4) do not apply to you

3 years
2.

Do not report income that you should and it is more than 25% of the gross income shown on your return

6 years
3. File a fraudulent return No limit
4. Do not file a return No limit
5.

File a claim for credit or refund after you filed your return

The later of 3 years or 2 years after tax was paid

6.

File a claim for a loss from worthless securities

7 years

Also, make sure you categorize each tax return (and the supporting documents and receipts) by year.

After you havve sorted everything, it’s time to give it a home. Find a system that works for you. I have a bright, color-coordinated hanging folder system in my file cabinet. I have everything organized by tax year and within the tax year label, I have the documents broken down by category. I also have a massive accordion folder in the tax year labeled “2013” that I empty the receipts from my purse into every week.

Posted To: The Daily Deduction By: Lauryn on 10/2/2013 09:28:58 AM
blog comments powered by Disqus
  • Connect with us on Facebook
  • Follow us on twitter
  • Connect with us on Tumblr
  • Connect with us on You Tube