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.
- 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.
- 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.
- 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:|
Owe additional tax and (2), (3), and (4) do not apply to you
Do not report income that you should and it is more than 25% of the gross income shown on your return
|3.||File a fraudulent return||No limit|
|4.||Do not file a return||No limit|
File a claim for credit or refund after you filed your return
The later of 3 years or 2 years after tax was paid
File a claim for a loss from worthless securities
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.