Tax time is here! Use tax preparation to maintain your file system. By doing so you are naturally tie “tax time” to “cleaning out your files” time. Here’s how:
- Take each file out of the drawer.
- Review the contents.
- Throw away what you can.
- Shred what you have to.
- Put what you need to keep in a tub like the one pictured above.
- Repeat until each file is cleaned out.
Some files may still have things in it like your life insurance policy but most should only have 2011 information in them. ALL 2010 papers should be in the tub. Once your taxes are completed you can lay the 2010 final tax envelope in the bin at the top. Label the bin TAXES 2010 and you are finished!!! Your taxes are complete and your files have been cleaned out. You are ready to start 2011 fresh and light!
Here is my supporting paperwork collected out of my files. When I received my tax envelope I placed it on top and labeled the bin and put it down in storage:
Repeat this process whenever you are gathering the material for your taxes to be done (I usually do this in February) and you will forever have neat and tidy file drawers! Remember, you only need to keep supporting tax documents for 3 years (unless you have a business and then it is 5-7 years – check with your accountant) so you should have 3 bins. Rotate out the oldest year for the current new year and you will always be able to find what you need.
You may keep a forth bin for all the old final-tax envelopes. I don’t want to get rid of those. But, they are skinny and you could fit MANY in one tub.
I know some of you are saying, “WHAT?? If only my files were that orderly! I might be able to clean them out but they are a mess!!” Give yourself an hour this weekend, empty out a file drawer, make files for papers that you routinely keep plus one extra one that says TAXES 2011. You can start now putting all your donation receipts, personal property tax receipt and other statements that your accountant might need right into the Taxes 2011 file and you will be all ready for next year’s “tax time/file clean”!
Other filing tips:
- Keep it simple!
- Try make file titles broad like CAR (not car maintenance, car insurance, car payments, etc) and GIVING (not Compassion, Goodwill, church, ARC, DAV, missions, etc), CREDIT CARDS (not a list of each one), INVESTMENTS, MEDICAL, etc. It will make filing a whole lot easier.
- Make one file for each family member, including a file for “pets”. Keep their important documents there.
- Remember to make a TAXES 2011 file to keep all things you might need to give you accountant. Have your accountant make a list this year and tape it in the hanging file so you know what you need!
- Don’t use file folders if you don’t have to. Just store things in the hanging file!
- Ask yourself – “Do I REALLY need to keep this?” “Can I find this information elsewhere?” “What is the worst thing that could happen if I let it go?” Try to keep LESS paper this year than you did last year!
Do you have your files cleaned out? Do you have your taxes completed for 2010? Has this motivated you to use tax time as a file clean?