Productivity expert Laura Stack, author of What to Do When There's Too Much To Do, shares these five "P's" of getting organized for tax time. So while you’re pulling receipts, statements, and records, keep these pragmatic points in mind.
1. Put. Keep this year’s information in your central filing cabinets, organized into a folder system that makes sense for you. "Don’t attempt to file everything from A-Z; instead group your files into categories that make sense," Stack says. Store older items in year-labeled containers, such as an archive document box from any office supply store, in a dry, out-of-the-way place.
2. Plan. Know what to save and for how long:
• Bank/credit card statements — three years
• Bills documenting deductions — three years
• Tax returns — six years
• Warranty info and receipts for big-ticket items — as long as you own them
• Investment statements — six years after selling
3. Purge. Take a look at the list above and shred receipts and financial records that exceed that recommended period of time.
4. Place. Gather needed forms when it’s time to prepare your taxes: 1099-INT, 1099-DIV, 1099-B, 1099-MISC K-1
5. Purchase. Take advantage of accounting software to make filing easier. Or hire a bookkeeper to compile tidy, professional files to make your financial life easier.