Grumble, grumble...it's about that time to think about getting those taxes done. I guess if you are a procrastinator, you are grumbling over just thinking about getting them started because you didn't think ahead last year. Right now, squirrel-ling around in your head is all the wondering of where you put all your important docs...if there are additional docs needed other than your W-2(s).
When it comes to taxes, if you don't have an organized system in place to make your already existing tax woes a little bit less woefull, listen up.
A rule of thumb I always follow is to keep tax docs and associated papers together for a duration between 4-7 years. I say 4-7 years because everyone's financial situation is a little different and the IRS has three years to audit a tax return if it feels there are "good faith errors." Four years is fairly standard and the IRS website suggests holding onto your employment tax records for four years. So, rather than trying to learn all the differnt reasons why you should hold on to this and that, find an organized system for you to file these away for around 4-7 years. As for me, I hold on to them for seven years, just to be on the safe side.
**Also, if you find a mistake and need to file an amended return, you have three years from the original filing date.
So, how are you going to keep this all in order? Organized storage that's how! The Container Store is having a "Tax Time Sale" as I am sure many other office supply stores are having a similar sale as well.
Store away your past returns in a sturdy and water proof file box. This tote box from the Contianer Store would definately suffice.
The box holds hanging file folders (that you can label with your handy dandy label maker) and they are stackable. So, if 4-7 years does not fit in one tote, get another and stack them...obviously with appropriate labeling. Another option, if you prefer the style over long term practicality, is the modular system.
I would suggest using the modular system for shorter term filing.
NOW, let talk about preparation for next years taxes. It is the beginning of 2008, so start thinking ahead for your taxes to be prepared more smoothly in 2009. Designate a file box or some kind of folder for anything that could possibly be used in your next year filing. This could be the modular system mentioned above, an accordian file, a desktop file, or just a simple folder. Find what works for you AND label it! Place it somewhere you know you will have easy access. So, when you make a donation, buy a hybrid car, make an Energy Star appliance purchase for your home, and/or purchase more books for school, immediatly place these reciepts (or even a self written reminder)in your designated and well labeled "2008 Taxes."
Filing and Storage can be fun! Find what style works for you and then pick a color! Your organization system can easily become a part of your home.