ORGANIZE: Tax Organization

20 February 2017

I wanted to pop in and share how we keep all of our tax documents organized throughout the year and come tax time.

Come tax season, everything that we need for the year lives in this zippered pouch where I throw miscellaneous paperwork as it comes in throughout the year. I have used these zippered pouches for multiple organizing projects in the past and I love that they are semi see through which makes it easy to see the contents. I like that they zip shut so that no loose paperwork can fall out, and I like that they all around look nice. I have used them to store paperwork, pictures, cashed checks, and have been using the smallest version to toss our pay stubs and important receipts that will need filed this year.

It is more efficient for us to to throw all of the paperwork into this folder throughout the year and sort it come tax time opposed to sorting it as it comes in. We don't have that much paperwork coming in at this moment in our lives so this system works well for us and keeps everything corralled in ONE PLACE. We don't own or run a business and we don't own a home, so our paperwork is limited to our W-2's, our retirement contributions, student loan interest and any donations.

Should we ever transition to using an accountant rather than filing ourselves, all of the paperwork is collectively in one spot and we're not searching for documents last minute. When we get to the point where we need to itemize more things and save more receipts we will use an additional zippered pouch specifically for receipts.

A couple months ago I saw that Alejandra from used the same pouches as file folders to house her tax documents and then filed them away in her file cabinet. I thought that was genius, so I ditched the manila envelope method that I was currently using and made the switch to use only zippered pouches.

I considered putting everything in a large binder, however I like the idea of keeping everything separated by year. These aren't something that we are going to reach for frequently, however in the event that we need to refer back to them, they are easy to access.

I like everything to have a place and I do not like having extra paperwork lying around the house. I believe (and I could be wrong) that you're supposed to hang onto your tax documents for 7 years. With that being said, I have 7 envelopes for each year and then a working envelope for the current year. After the 7th year, the files are stripped and the documents are destroyed.

I use colored file folders with fasteners to corral our W-2's, pay stubs, returns and other important documentation from each year. We only have two files in each zippered pouch, however we have the option to add more down the road should we need to expand. Each file is labeled as to who it is for and the year.

On the right side of the file I keep the state and federal tax returns documents and on the left I keep supporting documentation which includes everything that I have collected over the course of the year that is reflected on the return.

Once we finish our taxes for the year, it is stored away with the last 6 years where it will live for the next 7 years until we need to cycle it out and destroy it.

I hope this was helpful for anyone looking for some organizing inspiration during tax season! How do YOU organize your taxes?

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