Why Is Organizing Your Tax Documents Important?
When comes tax time, it has most people digging for receipts they received the past year, looking in every nook and cranny of the house. Organizing your tax documents should start right after New Year's Eve is over, so it will be much easier next year at tax time. An easier way to organize your tax documents is by using a few large manila envelopes for each year that might include envelopes for:
•income (check stubs), interest and dividends, bonuses, miscellaneous income
•utilities,
•medical bills,
•business expenses including mileage logs and travel receipts,
•mortgage interest, taxes, and insurance.
I know you are wondering how to organize your tax documents for this year's tax filing, but it is very simple if you do the organizing all year long, for only the year that you are in. Once the year has ended and your taxes completed, you are already a few months into the next year. There are a few things that you are going to need for this past year, when you are figuring out how to organize your tax documents, but you can sort them by the guideline we listed above to make it easier for your accountant.
Income and expenses are the things you will need to investigate, including utility bills, expenses from your self-employment and anything that could pertain to a home office if you are able to take the home office deductions, when figuring out how to organize your tax documents.
Since you can only write off a portion of your medical bills and some people don't have enough to worry about, you can always start a manila envelope at the beginning of each year to only put your medical statements and receipts in. If you are a self-employed businessperson, you will need copies of all utility payments or each of your bank statements to find these amounts, if you have a home office deduction.
Most individuals will have W-2's, 1099 forms and maybe 1098 forms to report their wages, interest earned on savings accounts and any dividend payments. You will get these forms in the mail after the next year has already started, so they don't necessarily require an envelope of their own. If you do odd jobs or are self-employed, how to organize your tax documents might mean that you keep copies of checks you received, invoices copies you wrote out and other pertinent information regarding self-employment in a separate envelope, as well.
When it comes to how to organize your tax documents, there are some people who will use a large envelope and just put anything pertaining to that particular year in it each year. Finding the receipts you need is easier as you go along because it can be hard to locate them several months later. When you want to know how to organize your tax documents, you want all the deductions you are entitled to, so if you are in doubt, it should go in the relevant envelope until you discuss it with your accountant.
•income (check stubs), interest and dividends, bonuses, miscellaneous income
•utilities,
•medical bills,
•business expenses including mileage logs and travel receipts,
•mortgage interest, taxes, and insurance.
I know you are wondering how to organize your tax documents for this year's tax filing, but it is very simple if you do the organizing all year long, for only the year that you are in. Once the year has ended and your taxes completed, you are already a few months into the next year. There are a few things that you are going to need for this past year, when you are figuring out how to organize your tax documents, but you can sort them by the guideline we listed above to make it easier for your accountant.
Income and expenses are the things you will need to investigate, including utility bills, expenses from your self-employment and anything that could pertain to a home office if you are able to take the home office deductions, when figuring out how to organize your tax documents.
Since you can only write off a portion of your medical bills and some people don't have enough to worry about, you can always start a manila envelope at the beginning of each year to only put your medical statements and receipts in. If you are a self-employed businessperson, you will need copies of all utility payments or each of your bank statements to find these amounts, if you have a home office deduction.
Most individuals will have W-2's, 1099 forms and maybe 1098 forms to report their wages, interest earned on savings accounts and any dividend payments. You will get these forms in the mail after the next year has already started, so they don't necessarily require an envelope of their own. If you do odd jobs or are self-employed, how to organize your tax documents might mean that you keep copies of checks you received, invoices copies you wrote out and other pertinent information regarding self-employment in a separate envelope, as well.
When it comes to how to organize your tax documents, there are some people who will use a large envelope and just put anything pertaining to that particular year in it each year. Finding the receipts you need is easier as you go along because it can be hard to locate them several months later. When you want to know how to organize your tax documents, you want all the deductions you are entitled to, so if you are in doubt, it should go in the relevant envelope until you discuss it with your accountant.
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