Tax Season Need Not Be Taxing!

Tax Season Need Not Be Taxing!

by Evelyn J. Mocbeichel

Evelyn J. Mocbeichel

Most of the documents needed for tax preparations have probably been received by now in most homes. April 15th seems to sneak up on us and being organized helps lessen the frustration of rushing to find necessary information. If files are kept in order year round, there is no need to panic. The hardest part about preparing income taxes is locating the papers that you have saved all year long. Putting your fingers on the forms you need, important records or cancelled checks can be a challenge, especially after a busy holiday season. Whether you do your own taxes via a computer program or take the paper work to an accountant, being organized is the key to having the tax forms accurately completed. To help with storing files and records visit an office supply store to see what they offer.

At the beginning of every year I buy a large, durable, accordion style file folder for the papers I file. Some folders have designated names for each compartment, starting with Auto Insurance, Bank Records, Credit Cards, Dental Bills, Income, Legal, Medical, Utilities, etc. Or you can buy a similar file folder that alphabetically lists only letters “A to Z” and create your own titles on each letter pocket using a label maker or hand printing the subject for each. After each bill is paid that will be used for tax purposes, slip the stub in the folder making sure the check number and date paid is on the statement. A duplicate computer record can be kept with account numbers and totals using a tax or home accounting program, if you prefer. An excel file, can tally your accounts with each new entry. At the end of the year you will easily see how much you have donated to charity, paid in medical bills or real estate taxes with this sheet or any other totals needed to compute your income taxes. The IRS suggests we keep our income tax records and files for at least seven years in case you are called in for an audit. A side note, just because you have not heard from the IRS the year after you filed, don’t think you will not hear from them years down the road.

If we have no dispute with a company regarding paying our utility bills and the particular company correctly recording our payments, we shred the paid bill statements after three years. When it is time to destroy old papers, whether it is a statement, medical record or other financial pieces of information, think about the shredder you are using. A “cross cut” machine cuts paper on a diagonal, making it impossible to piece together any information. Don’t skimp on this piece of equipment if you are considering purchasing one. It is your life history and personal identity that is at stake. If you think income tax time is a nightmare, just imagine what identity theft would be like!