Making Tax Time Easier Next Time Around

With tax season upon us and almost past us, many people are vowing to keep better records for next year. We say that every year, don't we? "Next year I'm going to put all my deductible receipts in one place so tax time won't be such a chore..." But then the following year comes and still you're left scrambling, searching through piles and piles of receipts to separate the deductible from the non-deductible. If this is you, keep reading.

There is an easier way. I used to be just like you. My receipts were scattered throughout my office; a pile here, a pile there. Then, I tried throwing all my receipts into one big box so all I had to do was sort at the end of the year. Year after year I kept telling myself there had to be an easier way.

Finally, I sat myself down. I knew that if I could keep all my receipts in one place and just take one hour each month to sort my receipts, I wouldn't have to spend numerous hours at the end of the year trying to figure out what the heck I was doing. I know you've thought of this, too, because it's common sense stuff. We all know how to do it. It's just a matter of doing it.

The first thing I did was made a list of all my bills. Your list might be different.

UTILITIES (power, water, phone, cable)

MORTGAGE

CREDIT CARDS

LOAN PAYMENTS

INVESTMENTS

GROCERIES

VEHICLE EXPENSES/FUEL

MEDICAL/DENTAL/PRESCRIPTION

INSURANCE

HOME IMPROVEMENT

EDUCATION/PROFESSIONAL EXPENSES

OTHER

Then I got one of those flexible files with 12 pockets. On the outside of the file I wrote the year. On the inside, I labeled each tab with the bill type. Now, as I'm paying bills I simply drop the paid receipt into the appropriate pocket of the folder. Sometimes I'll keep the receipts in a different folder until the end of the month then sort them into the yearly organizer.

Then - at tax time - all the receipts for the previous year are already sorted by type and easy to find. Now, if you work freelance or have your own small home business, you might need additional folders like one for business expenses and another for paid receipts sorted by month. But you get the idea. It simply takes a little discipline and a few minutes of your time each month to avoid the mess come next tax season. So print out this article. Then, this coming weekend, why not take a trip to the office supply? The go home and grab your receipts for the past few months and get it started. For a few bucks and some time spent now, you can save yourself the hassle and anxiety of searching for those deductible receipts next tax season!