Christmas is over and we have ushered in a new year.  January is the time to get down to business and get ourselves organized.  With very little effort you can have everything running like clockwork. Are you still using the proverbial shoebox to organize your taxes?  There is a better way!  It is easy to maintain and at the end of the year, most of your work is complete.  Remember that your accountant charges by the hour, so the more work you do for them, the more money you will save.  If you do your own taxes, you will have saved yourself time.

In January label four file folders and one soft binder for that year:

  • Accounts Payable (money spent such as utilities, phone, etc.)
  • Investments
  • Miscellaneous
  • Medical

Your accounts payable file will sit empty until December 31st when you will fill it with all your statements and bills for that year. For example, my husband is able to claim his home office as a tax write-off and needs to keep records of phone bills, utilities, expenses, etc.  In January, I  label a file folder for every monthly payment made on things like car payments, house payments, insurance payments, phone bills, utilities, water bills, credit card statements, etc.  On December 31, I pull each file, remove and staple or rubber band the contents together and run a total indicating the total dollar amount for that year.  I run totals only for those needed for tax purposes and permanently transfer them all into the accounts payable tax file.  I choose to keep everything in one large expandable folder along with tax records for that year.  You won’t have to create new file folders for your monthly payments as they are now empty and ready for a new year.

I keep a ledger in the business file folder to record and keep any and all car mileage, business meals, office expenses, etc. You may prefer to use envelopes to hold the receipts and keep a record of those expenses on the outside of the envelope.

The investment file folder is where I place a copy of anything bought or sold during the year along with the year-end statements you will receive towards the end of  December and January.   Keep a list of your investments in the file to check off when you receive the year-end statements.

The miscellaneous file folder will hold things like your charitable contributions, W-2’s, car registration taxes, etc.  This is my catch-all file folder.  Anything tax-related that I am not sure of goes into this file.

The medical binder will hold all your Explanation of Benefits from your insurance company as well as all your medical receipts.  Before creating your medical binder, please see my blog on Organizing Your New Year –Medical Receipts and Records.

Adjust these ideas and files to your needs.  The point is to keep records updated and in place as they happen.  You will find that it saves time and you are less likely to lose important receipts and information that may be needed to complete your taxes.  As well, if ever you need to go back to another tax year for audit purposes, you will know that everything for that particular year is in one place with all the pertinent information.  Good Luck!