Tax Day is fast approaching. Did you know the average taxpayer spends more than 24 hours preparing their 1040 “long” form? That is according to the U.S. Tax Payers Union. Establishing a functional home filing system is a key factor in reducing the stress of tax preparation. It may take some time to actually file your piles but you can set up a functional filing system in an afternoon. Here are three simple tips…
Containerize
Most papers are never referenced after taxes are filed. However, they must be kept for many years. Create a place for papers and information to be stored depending on when it will be needed.
An effective filing system will help you…
1. Keep current information easily accessible and maintainable.
2. Keep support records from being lost in piles of reference materials and everyday information.
3. Keep vital documents safe and secure.
Categorize
The whole family should be able to file and retrieve information from your household filing system. Filing your papers and personal information under consistent simple categories will help anyone quickly locate anything they need. Choose categories carefully by making sure they are broad enough to cover multiple subjects. Studies have shown that colors and graphics are recognized quicker than words, so consider using them in your system.
Keep your system simple by…
1. Limiting your main categories to five or six
2. Choosing a color or graphic to represent each category.
3. Keeping categories consistent in all containers.
Save time by using a pre-designed system like JOYS™ Brand Organizational Products.
Familiarize
If you can look at a piece of paper for what it is you can quickly make a decision to keep or toss it. Take the time to read the IRS publication on Record Retention (Publication 552) and know what personal documents are considered vital. This will help to eliminate some of the fear associated with tossing papers.
Any piece of paper can be classified as one of the following…
1.Documents provide proof of ownership, responsibility and identity and are considered most important or vital.
2.Records support past activity and information and are primarily needed for tax and insurance purposes.
3.References provide general or specific information and are considered the least important or clutter.
Remember, the rewards of a balanced life are worth the commitment it takes to get organized. This is especially true this time of year when locating support records for tax preparation can be time consuming.
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