Reduce tax time stress with planning and organization

I filed my tax return today! And all 2009 documents are filed safely away with my tax return. Because of my organized filing system, it took less than an hour to gather everything together. This is a huge improvement over past years when I didn’t have any system in place. Every year I procrastinated until the last minute because it was such a chore to find everything and organize it before I could even begin working on the return.

Are you guilty of procrastinating when it comes to doing your taxes? Is it because avoiding tackling the mountain of receipts and documents that have been piling up for the past 12 months? Follow these easy steps to make this season less taxing.

Tax time is inherently stressful for people because they realize that they need to organize their important documents but they don’t know where to begin. In reality, tax time is the perfect opportunity to get organized and to develop a system that will work for you for years to come. This is what made the difference for me.

With the tax deadline looming, try these suggestions to make this season less stressful.

1. Prepare for tax time by making an electronic checklist of documents you will need based on your returns from the last few years. Create the checklist by reviewing your tax returns from previous years and attach it to the inside flap of your tax folder. Also, organize your documents by category such as income, deductions, exemptions and miscellaneous. For instance, deductions would include mortgage interest, property taxes and residential energy credits. Exemptions could include vehicle registration and taxes, medical expenses, contributions to IRAs and student loan interest paid. By checking off the items as they are received, you will know which documents have arrived and which ones you are still waiting for.

2. Purge files of monthly bills from the previous year and set up a filing system for the current year that includes receipts, credit card and bank statements, medical expenses and utility payments. It is best to shred any documents before you discard them. Only keep prior year documents that are needed to support a prior year tax return.

3. Place current tax records and other important documents in files that are clearly marked and easily accessible. After your tax returns have been filed, place your copy of the return and all supporting documents into a secure file, preferably something with a closed top like a Smead Expanding File, label it for the tax year, and store in a secure location with previous years’ returns. If you prepared your tax return electronically, place a disk with backup copies in the file for safekeeping. The picture shows what I use and it has worked great for many years.

4. Plan ahead for next year by setting up a filing system for documents and receipts for the current year. In January, get a jump start on this year’s tax return by setting up an expanding file with sections labeled for income, expenses and taxes. Place documents like payroll stubs, 1099s and statements from your financial institution in the income section; receipts for tuition expenses, real estate transactions and donations in the expense section; and receipts for tax expenses in the tax section. If you store the file close to where you sort your mail and file the documents as they are received, the papers will be ready for you when you begin working on next year’s tax return. I love the FileSolutions Home Filing System, a ready-made colorful home filing system that makes filing easy.

5. Preserve tax returns indefinitely and store supporting tax documents (which can be destroyed after seven years) in a file labeled with the year and the destruction date. Be sure to check with your tax advisor before destroying any documents.

6. Put Your Feet Up and know that you are ready for next year!

With April 15th rapidly approaching, hare a few free sites that offer free filing services:

• http://free.free1040taxreturn.com/
• http://www.fileyourtaxes.com/Alliance
• http://www.eztaxreturn.com/scriptsez/start.exe/eztax/p/alliance2009/start.html?r_link=www.irs.gov
• http://www.efiletaxreturns.net/home.aspx
• http://www.completetax.com/FFAindex.asp?welcome=GY1318083
• http://www.taxactonline.com/index.asp?sc=0850302
• http://free.123easytaxfiling.com/
• http://www.1040now.net/freefile.htm
• http://www.free-tax-return.com/2008/
• http://www.icanfreefile.org/
• http://www.taxslayer.com/americanpledge/default.aspx?source=ihtffgtsd
• https://www.taxsimple.org/index.aspx
• http://onlinetaxpros.com/index.php?linkid=ff
• http://citizentaxfree.com/
• http://www.esmarttax.com/freefederalfile.asp
• http://www.olt.com/main/oltfree/default.asp
• http://turbotax.intuit.com/taxfreedom/
• http://www.freetaxusa.com/
• http://www.hrblock.com/taxes/partner/index.jsp?otpPartnerId=180

 Here’s to a tax season with less stress!!

FEBRUARY is Archive Your Files Month

What’s the shape of your home filing system? Are your filing drawers stuffed so full that it’s nearly impossible to get another piece of paper into – or out of – them? This is sure to create additional piles around your file cabinet(s) because its such an inconvenience to get the filing done.

Once a year, you should schedule time to review your files and purge as much as possible, leaving room for next year’s papers. Consider these tips for maintaining a lean and accessible home filing system.

DETERMINE WHAT TO KEEP

As you sort through papers, ask yourself, “When will I really need this again?” “Can it be easily recreated or retrieved elsewhere?’ Don’t hang onto things unless you have a really good reason! Be ruthless – remember, 80% of the things you file will need get referred to again!

KEEP RECORDS RETENTION GUIDELINES IN MIND 

Your accountant, attorney, or professional organizer can tell you which documents you should keep for legal and tax purposes. Think in terms of what you would need to have to support your tax return. If there is no tax implication for a piece of paper on a current or past tax return, there is likely no purpose to hold onto the paper.  

SOME PAPERS CAN BE IMMEDIATELY TOSSED

Instruction manuals for products you no longer own, old research materials, previous drafts of letters, out-of-date magazine and articles, and receipts for items past their return date can be discarded.

STASH IMPORTANT DOCUMENTS IN A SAFETY DEPOSIT BOX or HOME SAFE

It is imperative that you stock your safety deposit box or home safe with the following papers (originals):

• adoption and citizenship papers
• passports
• birth, death, and marriage certificates
• deeds
• divorce decrees
•  insurance policy papers
• lease agreements and loan documents
• mortgage papers
• personal property appraisals (jewelry, collectibles)
• Social Security cards
• stock and bond certificates
• vehicle titles
• copies of wills and powers of attorney papers

And don’t forget to LOCK your home safe each time you access it. Most home safe’s are NOT fireproof if the lock is not engaged.

Setting up a home filing system can be a time-consuming chore, so I found a great ready-made filing system FILESOLUTIONS Home Filing System, that takes about an hour to set up, and it lasts a life-time. I’ll soon do a detailed review of this product, but for now, here’s more information about this essential ready-made filing system.

What an Email Inbox is Not

I found this great article about e-mail clutter written by fellow Professional Organizer Donna Lindley

Consider your physical mailbox at home. Would you store pieces of mail in your mailbox that require action? What about mail announcing that your friend has moved and has a new address? How about mail reminding you of an upcoming appointment? I didn’t think so. Your email inbox should not be any different. A mailbox, whether physical or virtual, is a place to receive mail. It is NOT meant for storage. Mail should come in and out quickly.

Below are some of the most common items that we find “stored” in our clients’ inboxes. An email inbox is NOT a:

Filing System - create folders to store email that you want to keep for future reference.
Contact Management System – use a contact management system to store contact information such as email addresses, phone numbers, fax numbers, addresses, etc. Some options include Microsoft Outlook, ACT!, Goldmine, and Salesforce.com.

Calendar - store your appointments in your calendar. It doesn’t matter whether you keep a paper-based calendar or an electronic calendar. You need to have one place to look to see all of your appointments.

‘Favorites’ List – if someone sends you a great website, don’t leave it in an email in your inbox. You can add it to your “Favorites” in Internet Explorer, your “Bookmarks” in Mozilla Firefox, or try Delicious. Delicious is a free Social Bookmarking website. It allows you to bookmark your favorite sites and access them anytime from any computer with internet access. You can keep your “favorites” private or share them with others.

To-Do List – your email inbox is the worst place to store your to-dos. Again, you want to have one place to go to see all of your to-dos. You cannot possibly compare and prioritize them if they are not stored together. This is probably the most common offender.

Many of you are familiar with the old adage – A place for everything and everything in its place. By creating “homes” for each of these types of items listed above, you can gain control of your email inbox, keep it organized and save time.

Michigan-based Productivity Trainer and Certified Professional Organizer, Donna Lindley, publishes the “Timely Tips” monthly ezine from Organized Office Solutions. If you’re ready to jump-start your productivity by organizing your space, time, email and paper, sign up to receive your FREE tips by going to [http://www.OrganizedOfficeSolutions.com]http://www.OrganizedOfficeSolutions.com.

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