Tax filing season approaches: Develop a robust filing system to prepare

Tax filing deadlines have been pushed back from April 15 to April 18, the IRS recently announced. But why wait till then? Get yourself organized now and have your easiest tax filing yet.

By , Guest blogger

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    Is this your current tax filing system? Burying yourself in papers and receipts while scowling at a 1040? Take time now to organize your papers in a way that makes sense to you and that you can easily keep up in coming months and years. Tax filing will become smoother, easier, and quicker – not to mention less stressful.
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Develop a robust filing system.

A few years ago, I had a nightmarish time filing my taxes. I still remember it – 2007 was “the year of the dreaded tax return.”

The problem wasn’t filling out the forms or anything like that. The problem was simply finding all of the papers I needed to get the taxes finished. Some papers were in the “catch all” on the entryway table. Some were stowed away in various drawers. Still others were in a box of “important papers.”

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It was a mess. I spent many hours going through piles of papers. Finally, after the whole process was over, I realized how worthwhile it would have been to spend thirty minutes spread throughout the year getting and keeping all of this stuff in order.

I spent some time reading about home filing systems, purchased a filing cabinet and some folders, and never looked back.

It seemed, at the time, as though the process of setting it up would take forever and never really repay the time investment, but after a few years of having it, I have to say that time and time again, a good paper filing system has saved me a substantial amount of time on the whole.

Starting from Scratch
Many people who start a filing system in their home are starting from nothing more than a big pile of disorganized “important” papers.

I wrote a detailed guide on filing from scratch a few years ago, but I’ll summarize it for you below.

First and foremost, you need a good place to store your files – a filing cabinet. I’d look for four things when shopping:

A good suspension system Do the drawers slide in and out easily?
Counterbalancing If you pull out a full drawer, does it cause the cabinet to tip?
Thick and rust-resistant metal, possibly lockable Does the metal in the cabinet seem flimsy? Is it stainless steel?
Look for the Underwriters’ Laboratory seal This is usually a great indication of a quality filing cabinet.

What exactly do you file? I think this depends heavily on the person, but here are the documents that I include:

Personal papers
Tax returns
Deeds, titles, and surveys
Insurance policies
Household inventory
Instruction manuals and warranties
Hard drive backups
Paycheck stubs
Employee benefit statements and plans
Retirement statements and plans
Credit card statements
Debt documentation
Investment information
Charitable donation receipts
A will
Trust documentation
A durable power of attorney
A living will
A master document explaining what all of this stuff is

Some of these documents also exist in a second copy in a safe deposit box at a local bank, in case of a devastating home fire.

Trust me: it’s well worth your time to get a robust filing system in place. You’ll find yourself turning to it – and valuing it – time and time again over the coming years.

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