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Midyear tax tip #10: Get organized

What's that saying about good intentions? Well, I'm going to paraphrase it a tad for taxes:

The road to tax hell is paved with unorganized filers.

Sure, that sounds a bit melodramatic. I have been watching the operatic stunts of World Cup players, so maybe their histrionics have affected me a bit.

But emphasis on tax organization is not as over-the-top as it initially sounds.

If you don't have critical tax information -- and substantiation -- at your fingertips, then you could easily miss out on tax breaks and end up paying the IRS much more than you should.

That's why the recommendation to get your tax filing material organized now is a great way to close out our Midyear Tax Moves. In fact, organization is so crucial to taxes that three folks -- Marilyn, Paul and Kate -- suggested it.

Your organization system doesn't have to be elaborate. It can be on your computer via a self-created spreadsheet or one of the many prepared packages available.

Or, if you're old-fashioned, a paper-based filing system is fine.

The key is to pick one and stick with it.

Accordion folder I am a big fan of accordion folders. They have enough slots for various items -- receipts, for both business expenses and personal deductible items (medical costs, charitable gifts); reminder notes (what are the requirements of the American Opportunity Credit?); draft forms; income statements (1099s from contracting jobs or investments and/or your workplace W-2); etc. -- but all the info is in one handy place.

If you do your taxes yourself, the accordion folder is easy to carry to your desk when you're ready to work on your 1040 next year. Or if you opt for outside help, it's just as handy to deliver it to your accountant.

But the first step is to set up your system.

Even if you've been diligent about keeping all the relevant tax material but just threw it into a box, consider sorting those documents and putting them into your filing system now.

By breaking out the information into the appropriate tax filing categories, your annual Form 1040 tasks will go much more quickly and, I hope, produce a better financial result for you instead of for Uncle Sam.

And as you continue to put material into your filing system, you'll be alerted to what holes exist in the documentation.

Discovering this means you can plug the gaps as they arise instead of scrambling to find the data when you're already facing the April 15 deadline.

One more tax tip remains: Thanks again, Marilyn, Paul and Kate for wrapping up the first annual  Midyear Tax Moves feature with the important reminder to get our tax documents in order ASAP.

And thanks to everyone who contributed to this feature.

Remember, the key to saving on your taxes is to staying on top of the moves you need to make now and year round!

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Wyatt Christman

Color coded folders does help a ton in keeping not just your taxes but any other information organized. Of course if you need that information to be truly "at your fingertips" then best way to organize and backup your tax information is by using an online service. Ideal is when your accountant has a secure system in place so you can just login and get what you need. That way if you find yourself in a meeting and needing that information, you can login from any browser and get it at a moments notice.

Elizabeth R.

I'm so glad to see that you have the same opinion I do: "The key is to pick one and stick with it."

I actually helped a new client the other day who had started an in home daycare. She actually spoke to someone else first who refused to help her unless she purchased Quickbooks. (She just wanted help coming up with estimated payments).

I told her return Quickbooks if she wasn't going to use it. I just needed her income for the quarter and her approximate expenses and I didn't care how she kept track of it as long as she did and had receipts to back it up.

I'm a very big fan of find a system that works for you and just stick with it!


Great advise, I personally am guilty of being horribly unorganized when it comes to taxes. I will definitely put some of these tips to use.

By the way I mentioned you in my top 10 tax blog post -

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