Accessible in April

The month of April automatically brings to mind the preparation and filing of taxes. This can be a stressful process, made even worse if you have to struggle to find the needed tax documents. Not being able to locate certain documents or receipts can even prevent you from getting the most from your return. Maybe that’s why the third week of April was designated as “Organize Your Files” Week.

If you set up a system for dealing with important tax papers now and use it throughout the year, you will be ready when April rolls around. Here are a few F.I.L.E. tips that may help you organize your tax documents.

Find a specific space for your incoming tax documents. This system does not have to be complicated or fancy. It could be a few files in a drawer, an accordion file, or even a labelled box. The most important thing is that it is accessible so you can reach it easily when new documents need to be added. For example, keep it on a convenient bookshelf or in a drawer rather than stashing in the top of a closet.

Identify what documents you will need next year. A good way to start figuring out what records you need to keep is to look at the past year. You may want to create a list of those necessary documents and tuck it into your tax container as a reminder. Here are a few records you may need to keep: income information, childcare expenses, education expenses, medical expenses, taxes paid, charitable donations, investments, and retirement savings. Your specific needs are unique, though, so you may consider consulting an accountant to help compile an appropriate list. Tax documents should be kept for a minimum of 7 years, but older documents (used in prior tax filings) do not need to be as readily accessible.

Label your tax container. This will make it easier to find and organize. If you have a large variety or volume of documents, you may also find it helpful to divide them further into sub-categories. For example, receipts from charitable donations can be filed or clipped together while invoices for medical expenses can be stored in a separate file or clip. Tagging each of these subcategories will make your file easier to use.

Execute the plan. Setting up the file system alone is not sufficient; using it effectively is what makes the difference when tax season arrives. To improve your use of the system, double-check your plan by asking yourself these questions. Can I get to the file easily? Do I know what I need to keep? Do I have any papers now that should go into my current file? In answering these questions, you are on your way to removing stress and being ready for the next tax season.

This April, don’t just finish this year’s tax filing – get a great start on next year’s. You’ll be glad you did come April 2022!

© 2021 Beth Giles

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